The last major change in stamp duties happened in 2018 where Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) were both increased as a cooling measure meant to deter the formation of a housing bubble.
There are 3 major types of stamp duties governing property transactions, with the last type being Seller’s Stamp Duty (SSD). These duties are universally applicable to investors and entities of all nationalities, and to Singaporeans and Permanent Residents as well. While this applies to stocks and shares as well, this article will focus on how this can impact your real estate investment.
Understanding BSD and ABSD
These duties are essentially different sides of the same coin and are levied when any property formally changes ownership. The former is applied to all purchases at the property’s market value or its documented price, with the higher value taking precedence.
Valuation must also account for any additional benefits that are not cash based, including rebates, vouchers and other guarantees. Their value must be added to the purchase price before calculation of BSD as well. Do visit Real Vantage guide at https://www.realvantage.co/insights/singapore-real-estate-stamp-duties-explained/ for more details and an example of stamp duty calculation to help you get started!
The changes in ABSD and its implementation back in December 2011 is more widely documented and gained quite a bit of buzz when it was increased in 2018. Increasing ABSD was justified by the government as their way of clamping down on the exploding rates of property purchases in Singapore, especially from second-home investors and foreign buyers. Their aim: to shake off fears of an emerging housing bubble and to protect newer local buyers in securing their first home. The current ABSD rates are listed below for your easy reference:
- Singaporean citizens buying a second property – 12%, increasing to 15% for subsequent purchases
- Permanent residents buying a first property – 5%, increasing to 15% for subsequent purchases
- Foreigners making any purchases – 20%
- Entities making any purchases – 20%
Though the latter two are less likely to be within your consideration, accounting for BSD and ABSD is still important before starting to invest in real estate.
What About SSD?
SSD usually will not apply to those buying properties for residential purposes, but is levied when real estate investors flip properties in the short-term for profit. This could apply if your position is compromised, and you are forced to sell. The rates are at 15% for selling properties within the first year of ownership, at 10% and 5% for selling within the second and third years, respectively.
Additional stamp duties are applied to the transfer of shares in the property as well. Feeling deterred and confused about real estate investment? Real Vantage has all you need and more, including options and guides for alternative investment options – including Real Estate Investment Trusts (REITs) or overseas properties. Whether you are a first-time investor or more experienced with managing a portfolio, their insight column and articles are worth a read as well, so check them out!
