Stamp Duty

Understanding Stamp Duty in Singapore

Stamp duty is a tax imposed on specific documents related to the transfer of property and shares in Singapore. This tax is a crucial part of the real estate and financial transaction process, and understanding its implications is essential for buyers, sellers, and investors alike.

1. What is Stamp Duty?

Stamp duty is a government tax levied on certain transactions involving property and shares. It is typically applied to documents such as sales and purchase agreements, leases, and transfer deeds, and is calculated based on the value of the transaction.

2. Who is Liable to Pay for the Duty?

The recipient of the property or shares, known as the buyer or transferee, is generally liable to pay the stamp duty. However, the seller or transferor may agree to cover the costs as part of the transaction agreement. The exact responsibility can be specified in the sales and purchase agreement.

3. Gifts of Property and Shares

Gifts of property and shares are also subject to stamp duty. When property or shares are transferred as a gift, the recipient (donee) must pay the stamp duty based on the market value of the assets at the time of transfer, even if no monetary consideration is involved.

4. Stamp Duty on Purchase of Shares

For the purchase of shares in a company, stamp duty is charged at a rate of 0.2% on the purchase price or the market value of the shares, whichever is higher. This applies to both local and foreign shares, making it an important consideration for investors.

5. Buyer Stamp Duty for Non-Residential Properties

For non-residential properties, Buyer Stamp Duty (BSD) is calculated based on the purchase price or market value of the property. The rates are as follows:

• 1% on the first S$180,000

• 2% on the next S$180,000

• 3% on the next S$640,000

• 4% on the next S$500,000

• 5% on the next S$1,500,000 and any amount remaining

6. Buyer Stamp Duty for Residential Properties

Residential properties incur Buyer Stamp Duty calculated with specific thresholds. The rates are as follows:

• 1% on the first S$180,000

• 2% on the next S$180,000

• 3% on the next S$640,000

• 4% on the next S$500,000

• 5% on the next S$1,500,000

• 6% on the amount remaining

7. Additional Buyer Stamp Duty

In addition to the standard Buyer Stamp Duty, Additional Buyer Stamp Duty (ABSD) applies to certain categories of buyers, such as foreign purchasers and entities. The rates vary depending on the buyer's profile:

• 20% for foreign buyers

• 17% for entities

• Other rates may apply for Singapore citizens and permanent residents, depending on the number of properties owned.

8. Seller Stamp Duty

Seller Stamp Duty (SSD) applies to the sale of both residential and industrial properties within a specified holding period. For residential properties, if a property is sold within three years of purchase, the seller must pay SSD based on the selling price or market value, calculated as follows:

• 12% if sold within the first year

• 8% if sold within the second year

• 4% if sold within the third year

For industrial properties, SSD applies if the property is sold within three years of purchase, calculated as follows:

• 15% if sold within the first year

• 10% if sold within the second year

• 5% if sold within the third year

More details on SSD for industrial properties can be found on the IRAS website.

9. Lease / Tenancy Agreements for Properties

Lease and tenancy agreements for properties also attract stamp duty. The duty is calculated based on the total rent payable over the lease term, with rates of 0.4% for leases of more than one year.

10. Mortgages for Properties

Stamp duty is also applicable to mortgages for properties. The duty is charged at 0.4% of the loan amount, making it an additional cost to consider when financing property purchases.

11. Stamping Deadlines and Late Payments or Failure to Pay

Stamp duty must be paid within 14 days from the execution of the relevant document. If you fail to pay within this timeframe, penalties may apply. According to the Inland Revenue Authority of Singapore (IRAS), late payment can result in additional fines, and failure to pay may lead to interest charges on the outstanding amount. It is essential to adhere to these deadlines to avoid incurring extra costs. For more detailed information, you can visit the IRAS website.

Conclusion

Understanding stamp duty in Singapore is essential for anyone involved in property transactions or share purchases. By being aware of the different types of stamp duty, payment obligations, and deadlines, individuals can navigate the process more effectively and ensure compliance with local regulations.