Stamp Duties – Who pays what, when, and how much?

From my daily dealings with buyers and sellers of Singapore property, along with enquiries from blog readers, there are a number of queries that constantly pop up on my radar (besides the perennial favorite, “How’s the market?”)

One area that has a lot of people confused is the different stamp duties introduced via the various cooling measures. Apologies to readers who are familiar with the stamp duty matrix and consider this stale, but I reckon the fact that I’ve encountered even senior conveyancing lawyers who aren’t too clear on their stamp duty facts suggests that this is an area that requires clarification.

    Basic Stamp Duty

Let’s start with the basics. All property purchases require the payment of stamp duty, whether residential or commercial property. To differentiate this from the “Sellers’ Stamp Duty” and “Additional Buyers’ Stamp Duty” more recently introduced for residential properties, I shall term this “Basic Stamp Duty”. This is calculated as follows:-

First $180,000 of property value charged at 1%;
next $180,000 of property value charged at 2%; and
anything above $360,000 charged at 3%.

This is often condensed into the formulaic “3% of Purchase Price minus $5,400”, which is generally true, except for properties that cost less than $360,000.

    Sellers’ Stamp Duty

Now, since February of 2010, the government has introduced a series of cooling measures that require sellers of residential properties to also pay stamp duties if they sell within a certain time frame. The requisite holding period and rate of stamp duty charged varies depending on when the property was first acquired. There are essentially 3 relevant time periods applicable (if you acquired your property before 20 February, you have never needed to pay Sellers’ Stamp Duty at any point):-

    Property acquired between 20 February to 29 August 2010

Sellers had to pay Sellers’ Stamp Duty at a rate akin to Basic Stamp Duty (see above) if property was sold within a year of acquisition. Since a property acquired on 29 August 2010 would have long passed the required 1-year holding period, this category of owner can basically breathe easy!

    Property acquired between 30 August 2010 to 13 January 2011

If sold within a year, sellers paid at a rate akin to Basic Stamp Duty on the sale price or market value, whichever higher. If within the second year, the sale would be taxed at two-thirds of the Basic Stamp Duty, and if within the third year, one-third.

    Property acquired from 14 January 2011 onwards

If sold within the first, second, third or fourth years, Sellers Stamp Duty of 16%, 12%, 8% or 4% respectively is chargeable on the selling price or market value, whichever is higher.

Sellers’ Stamp Duty is payable within 14 days of the exercise of the Option to Purchase. In practical terms, this means that an affected seller receives his usual 1% option fee when he issues an Option to Purchase, and once the buyer exercises the option by paying in a further 4% to the seller’s lawyers, the seller has 14 days within which to pay the Sellers’ Stamp Duty. That is to say, if you wish to sell your property before the holding period is up, you had better ensure you have liquid funds available before you issue that Option to Purchase!

Another common query I get is when is the acquisition date for new home sales direct from developers. I’ve had clients complain to me that they been wrongly informed that it’s when the property gets its Temporary Occupation Permit, or when you take the keys. It’s actually when the Sale & Purchase Agreement is signed and dated. (For resale purchases, it’s when you exercised the option to purchase.)

    Additional Buyers’ Stamp Duty

This affects the following residential property buyers:-
Singaporeans buying their third (or beyond) property;
Permanent residents buying their second (or more) property;
Non-individuals such as companies or organizations; and

Affected Singaporeans and PRs pay an additional 3% stamp duty, whilst foreigners and non-individuals pay an additional 10%. (* Note that nationals of countries enjoying Free Trade Agreements with Singapore enjoy similar treatment to Singaporeans for the purposes of ABSD)

As with Basic Stamp Duty, ABSD is payable by the buyer within 14 days of exercise of option.

Do note that for all situations, be it Basic, Sellers’ or Additional Buyers’ stamp duties, stamp duty is calculated based on either the consideration (ie. purchase/selling price) or market value, whichever is higher. This means that even for gift/undervalued transactions, stamp duties are payable based on market value.

I’ve intentionally kept my own comments to a minimum in an attempt to keep things simple for readers seeking a quick comprehensive guide to stamp duty on property transactions. I’ve also hesitated to elaborate further on the situations within which SSD and ABSD may be waived, but if you do require further information on the above do feel free to contact me.

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