Back To Top

Your Lowtax Account


Singapore: Working and Living

Buying and Renting Real Estate

Accommodation

Most housing in Singapore, for about 80% of the population, is public, much of it on purpose-built estates with shopping, social and recreational facilities built in.

Most expats however, and many richer Singaporeans, live in private properties, mostly in the form of apartment blocks or condos. Apartment units range from 50 to as large as 800 square meters. Many condos are highly sophisticated, quite up to the best US standards.

One recent development of 5-story apartments in a good area saw prices averaging SGD2,100 per square foot. Much higher prices were achieved for better quality apartments. 70% of buyers were said to be local.

Generally, prices are said to be still 10% below the peak values achieved in early 2008.

In September, 2010, amidst fears that the property market could be overheating, Singapore’s government announced immediate measures aimed at maintaining price stability, while also saying that it will continue to monitor the situation closely and will introduce additional measures if required later.

With effect from August 30, the Ministry of Finance has increased the holding period for the imposition of seller’s stamp duty (SSD) from the current one year to three years.

The government originally imposed an SSD for sellers buying residential properties on or after February 20, 2010 and selling them within a year of purchase. However, for residential properties bought on or after August 30, 2010, SSD will be imposed if these properties are sold within three years of purchase.

Specifically, the SSD levied on a residential property will be revised so that, if it is sold within the first year of purchase, the full SSD rate - 1% for the first SGD180,000 (US$132,500) of the consideration, 2% for the next SGD180,000, and 3% for the balance - will be imposed.

If the property is sold within the second year of purchase, two-thirds of the full SSD rate will be charged; and, if it is sold within the third year of purchase, one third of the full SSD rate will be imposed. No SSD will be payable by the vendor if the property is sold more than three years after it was bought.

In addition, for property buyers who already have one or more outstanding housing loans at the time of a new housing purchase, the minimum cash payment has been increased from 5% to 10% of the valuation limit, and the loan-to-value (LTV) limit has been decreased, for housing loans granted by financial institutions to these buyers from the current 80% to 70%.

The Ministry said: “While financial institutions' lending standards have remained prudent and the asset quality of housing loans has stayed robust, there are signs that more housing loans are originating at higher LTV bands of above 70%. In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to financial institutions to maintain credit standards.”

Property Taxation

Annual property taxes are imposed on property, based on estimated annual rental value; a 10% rate is imposed on non-owner occupied properties, while a 4% rate is imposed on those occupied by their owners. In the 2010 Budget, the introduction of a Progressive Property Tax Regime (PPTR) for owner-occupied properties was announced, to take effect from January 2011.

Under the PPTR, three tiers of rates are to be imposed on owner-occupied properties as follows:

  • Less than SGD6,000: 0%
  • Next SGD59,000: 4%
  • Balance: 6%

The 10% rate will remain in place for non-owner occupied properties.

Property tax must be paid in advance, by the end of January, for the whole of the year in question.

Singapore does not impose a separate tax on capital gains (such as those received from the sale of a property), although where a person is deemed by the tax authority to be a property trader (generally determined by looking at the frequency of the property transactions, the reasons for said transactions, and the holding period, amongst other things), the gains made will be taxable at the standard rate.

 

 

Back to Singapore Index »