Published: 5 November 2017 | Updated: 22 February 2018
Stamp duty is a tax on documents relating to immovable properties such as HDB flat Sales & Purchase Agreements, HDB landlord Tenancy Agreements etc.
But why do we need to pay it at all? Is stamp duty a necessary tax?
When buying a property, the ownership changes from the previous owner to you (the new occupier) – and it must be legally and officially registered. It is not only an offence to use a document which Stamp Duty has not been paid on, it is also important to note that only a document where Stamp Duty is paid can be admitted as evidence in the court in cases of disagreements.
Stamp duty is computed based on the consideration or market value of the relevant asset, whichever is higher. The Inland Revenue Authority of Singapore (IRAS) collect the 2 stamp duties imposed on the buyer:
- Buyer’s stamp duty (BSD)
- Additional buyer’s stamp duty (ABSD)
Buyer’s Stamp Duty
The BSD is levied on all purchases of property e.g. residential such as HDB units and Executive Condominium, commercial or industrial properties. The property is considered purchased when you exercise your option to purchase (OTP) or when you execute the sales and purchase agreement.
How BSD is calculated before 20 Feb 2018:
| Amount | BSD |
|---|---|
| On the first $180k | 1% |
| On the second $180k | 2% |
| Thereafter | 3% |
For example, if you buy a property at S$500,000 you would have to pay S$1,800 (on the first S$180k); plus, S$3,600 (on the second S$180k); and S$4,200 (on the remaining S$140k).
Thus, the total BSD amount payable would be S$7,800.
If the document is signed in Singapore, BSD must be paid for within 14 days of:
With effect from 20 Feb 2018, there are differentiated BSD rates between residential and non-residential properties. The BSD rate for acquisition of residential properties on or after 20 Feb 2018 is up to 4%. This will apply to a portion of residential property value which is more than S$1 million. The move is meant to ensure that Singapore's tax system is more progressive, said Finance Minister Heng Swee Keat.
Here’s how BSD is calculated on or after 20 Feb 2018:
| Amount | BSD Rates for residential properties | BSD Rates for non-residential properties |
|---|---|---|
| On the first $180k | 1% | 1% |
| On the second $180k | 2% | 2% |
| Next $640 | 3% | 3% |
| Remaining Amount | 4% | 3% |
Additional Buyer’s Stamp Duty
The Additional Buyer’s Stamp Duty (ABSD) was imposed on top of the BSD, and applied to the purchase price, or the current market value of the property, whichever is higher.
However, under certain free trade agreements you'll be exempt from the ABSD if you're a citizen or permanent resident of the following countries:
- Iceland
- Lichtenstein
- Norway
- Switzerland; and
- The USA (citizens only)
In 2013, the ABSD was revised, to further slowdown the growth of the property market:
| Citizen | Buying 1st Residential Property | Buying 2nd Residential Property | Buying 3rd and Subsequent Residential Property |
|---|---|---|---|
| Singapore Citizen (SC) | NA | 7% | 10% |
| Singapore Permanent Resident (SPR) | 5% | 10% | 10% |
| Foreigners and Non-Individuals | 15% | 15% | 15% |
For example, if you are a foreigner buying a property at S$1 million, you will have to pay S$150,000 in ABSD. On the other hand, if you are an SPR, you will have to pay S$50,000 if you are buying the same property – assuming this is your first property.
Stamp Duty is an inevitable part of buying a property, and it’s not the only cost of buying a home to deal with. It’s still certainly a cost that needs to be accounted for in your financial planning.
The information herein should not be treated as a substitute for a property agent’s professional advice, for any question, please do not hesitate to get in touch with us at+65 6886 9009.
Source: ohmyhome