These Are The Taxes You Should Know When Invest In Singapore Property

Singapore is one of the favorite place for property investors in Asia. On a global scale, Singapore is also scores well as a form of wealth preservation due to its friendly investment environment. Most of the people jump into property investment field because they can get a significant profit from either capital appreciation and rental yield.

Sometimes, investing property out of country seems to be a better opportunities to earn more profits. Well, in order to do so, a good/ fully understanding of a country’s tax system is indispensable to obtain an accurate projected capital appreciation and rental yield of every properties you invested in.

Since Singapore is our neighbor, most of the property investors who already get rich from Malaysia property investment, and they will starting to consider investing property overseas and the first place/ country come to their mind is Singapore (of course). So, in today, we will discuss the taxes that the foreign property investors need to pay when invest properties in Singapore. There are 5 common types of taxes as follows;

1️⃣️ Buyer Stamp Duty (BSD)
2️⃣️ Additional Buyer Stamp Duty (ABSD)
3️⃣️ Property Tax
4️⃣️ Income Tax
5️⃣️ Seller’s Stamp Duty (SSD) (foreign property investors need to pay from buying, renting to selling a residential property)

Let’s begin with the first one;

1️⃣️ Buyer Stamp Duty (BSD)

This is the common tax that every property buyers need to pay when making a property purchase. In Singapore, every property buyers (citizens, permanent residents and foreigners) have to pay Buyer Stamp Duty (BSD) to Inland Revenue Authority of Singapore (IRAS). The calculation of BSD in Singapore as below;

1% on first $180k
2 % on next $180k
3% for the remainder

For example, if the property priced SGD$ 500k, the BSD payable is SGD$9,600.

2️⃣️ Additional Buyer Stamp Duty (ABSD)

Foreigners who buying residential property in Singapore have to pay an additional buyer stamp duty (ABSD) at a 15% of the property value on top of the Buyer Stamp Duty (BSD).

Example:

3️⃣️ Property Tax

Property tax is payable annually to IRAS. The payable amount of property tax is depends on whether the property is for personal use or rent out to generate income. If the buyer purchase a property for personal use, he/she then need to pay a 4% of the annual value of the property. While, if the buyer purchase a property with the purpose of rent out and generate income, he/she then need to pay a 10% of the annual value of the property.

Annual value is defined as the estimated gross annual rent of the property if it were to be rented out and is annually assessed by IRAS.

4️⃣️ Income Tax

For the terms of income tax, every foreigners who stay in Singapore for less than 182 days in a year have to pay a flat rate 20% of income generated from rental property. If foreigners who stay in Singapore is 183 days or more, they will be treated as a tax resident whereby income generated from rental property will be treated together with their employment income.

Hence, the rate of income tax will increase gradually based on their total annual earned income.

5️⃣️ Seller’s Stamp Duty (SSD)

In Malaysia, every property owners have to pay Real Property Gains Tax (RPGT) if they gain profit from disposal of property. Well, in Singapore, there is no such capital gain tax. But still, the property owner need to pay Seller’s Stamp Duty (SSD) when he/she sell out his/ her property in certain years. The rate of SSD as below;

Disposal of property within 1 year from the date of purchase ➜➜  16% of the property market value is payable
Disposal of property between 1 to 2 years ➜➜  12% 
Disposal of property between 2 to 3 years➜➜  8%
Disposal of property between 3 to 4 years➜➜ 4%
Disposal of property in 4th year and following year ➜➜  0% (no need to pay any seller’s stamp duty)

The above are the 5 common payable taxes in Singapore if you are foreigner who purchase a property for either personal use or investment purpose. Additionally, make sure you are fully understand the above taxes before investing in property in Singapore. If you have any doubts regarding the taxes of buying a property in Singapore, do consult the local taxes department or agencies.

–WMAPROPERTY

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