For the buyer of real estate, the purchase price of the property is not the only consideration to take into account. Bear in mind there are taxes involved when the property is purchased; there are also ongoing taxes that need to be paid while you are holding on to the property. This article will summarise the various taxes applicable to the purchase and holding of the property.
As a purchaser of the property, the following is a brief summary of the taxes applicable:
Basic Stamp Duty
The Basic Stamp Duty payable ranges from 1% to 4% depending on the value of the property as well as the type of property. Different rate apply for residential and non-residential property.
Additional Buyer Stamp Duty
Additional Buyer Stamp Duty is payable for purchase of residential property. The rate ranges from 5% to 25%. Exemption is given for each Singapore Citizen to purchase one residential property. Different rates apply depending on the status of the buyer (Singapore Citizen or Singapore Permanent Resident or Foreigner or Entity) as well as the number of residential property owned.
Shares Duty is payable on the purchase of shares in the company. The rate is 0.2% of the market value of the shares purchased. This is payable regardless of whether the company owns residential property.
Additional Conveyance Duty
Additional Conveyance Duty is payable for the purchase of equity interest in company that has substantial holding of Singapore residential property. The rate ranges from 16% to 19% depending on the value of the residential property holding in the company. This is payable only if the Buyer is a significant owner or will be a significant owner after the purchase.
Goods and Services Tax
Goods and Services Tax is payable by the buyer of non-residential property. The GST rate applicable is 7% of the purchase price.
Once the property or shares has been transferred to the buyer, the buyer (now known as the owner) is required to continue to pay the following taxes:
Property tax is payable for the ownership of the property. The rate for owner occupied residential property ranges from 0% to 16% of the Annual Value. The rate for non-owner occupied residential property ranges from 10% to 20% of the Annual Value. The rate for non-residential property is 10% of the Annual Value.
Income tax is payable if the property is tenanted. The income tax payable is based on the net rental income derived by the owner. The rate ranges from 0% to 22% if the owner is a resident individual. For non-resident individual, the rate is flat 22%.
For company, the rate applicable is up to 17% of the assessable income.
I hope this has been a useful read and can help you to better advise your clients about their real estate and financial planning needs.
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