Buying a property in Singapore is not as simple as just paying the purchase price; it often involves various taxes and fees, which can be more “impressive” than the property price itself. Whether for owner-occupancy or investment, understanding these major taxes and fees is crucial for assessing the overall cost. The Singapore government uses a series of tax designs to both raise revenue for the land and housing market and attempt to regulate speculative behavior and the risk of a real estate bubble. Taxes and fees are broadly divided into three categories: transaction-related taxes and fees (such as stamp duty), holding-related taxes and fees (such as annual property tax), and taxes that may be incurred when selling the property in the future (seller’s stamp duty).
Stamp Duty Payable When Buying a Property
The most basic tax in the property buying process is stamp duty, a statutory tax levied by the government on real estate transactions, which must be paid within a certain period after signing the contract.
Buyer’s Stamp Duty (BSD)
Buyer’s Stamp Duty (BSD) is a basic stamp duty that all buyers in Singapore must pay when purchasing any type of property, including residential and commercial properties. It is calculated based on the purchase price or market value (whichever is higher) and uses a progressive tax rate: the more expensive the property, the higher the percentage of the value exceeding the upper limit. For example, current rates range from 1% to a very high 6% (for the higher-value portion). The more expensive the property, the larger the absolute amount of BSD in the total transaction cost, but it is the basic tax for all buyers, regardless of their status or whether they are foreign.
Additional Buyer’s Stamp Duty (ABSD)
For some buyers, in addition to BSD, an Additional Buyer’s Stamp Duty (ABSD) is also required. This is a policy tax introduced by the government to curb speculative demand and encourage owner-occupancy. The ABSD rate depends on the buyer’s status (such as Singapore citizen, permanent resident, or foreigner) and the number of properties they already own. For example, under newer regulations, foreign buyers purchasing any residential property are required to pay up to 60% ABSD, while Singapore citizens pay approximately 20% for their second property and approximately 30% for their third and subsequent properties. Permanent residents (PRs) may enjoy lower tax rates for their first home, but the ABSD (Assessment of Property Value) is significantly higher for second and subsequent properties. This means that for non-local buyers, the ABSD is often more burdensome than the BSD (Business Expense Deduction), and in high-priced residential properties, the ABSD can substantially increase your total transaction costs.
Annual Property Tax After Purchase
After purchasing a property, as long as you still own it, you will need to pay property tax to the Inland Revenue Authority of Singapore (IRAS) annually. This is a tax based on the estimated annual rental value of the property; simply put, the government estimates a tax based on the potential rental income of the property.
Key characteristics of annual property tax: Each property has a government-assessed Annual Value (AV), which is the IRAS’s estimate of the property’s annual rental income. Property tax is calculated based on AV × tax rate, and it must be paid regardless of whether you live in the property or rent it out. For owner-occupied residential properties, the government offers more favorable tax rates, making the tax burden lighter for owners who live in the property. If the property is for investment purposes or rental, the tax rate is relatively higher, which is a regulatory measure by the government to impose a higher tax burden on investment properties. Property tax is not a one-time expense, but an ongoing annual expenditure, part of the cost of holding property. Therefore, when calculating the total cost, you must consider not only the tax on the purchase price but also the tax expenses incurred during the long-term holding period.
Taxes and Fees You May Pay When Selling a Property
When you decide to sell your property in the future, you may also need to pay Seller’s Stamp Duty (SSD) to the government. This is a tax on short-term transactions, aimed at curbing speculation and quick profit-taking.
Basic Rules of Seller’s Stamp Duty: SSD generally only applies to residential properties and primarily targets short-term sales. Under recent policies, if you sell a property within four years of holding it, you will be subject to different tax rates depending on the number of years held (e.g., Year 1 ~16%, Year 2 ~12%, Year 3 ~8%, Year 4 ~4%, and usually no SSD is payable after four years). SSD is calculated based on the higher of the resale price or market value of the property.
If you are engaging in short-term speculation or property trading, the Seller’s Stamp Duty (SSD) will increase your selling costs; however, if you hold the property for a long period (over approximately 4 years), you may be exempt from this tax.
Property taxes in Singapore mainly fall into three categories: one-off taxes at the time of purchase, annual taxes during the holding period, and taxes that may be incurred when selling the property in the future. The two most important transaction taxes are the Buyer’s Stamp Duty (BSD) and the Additional Buyer’s Stamp Duty (ABSD). The BSD applies to all buyers and is a basic tax levied based on the property price; the ABSD, on the other hand, is determined by the buyer’s status and the number of properties they already own—it is particularly high for foreign buyers (up to 60%), significantly increasing the total cost. After purchasing the property, you also need to pay annual property tax, which is related to the annual rental value of the property and is a long-term holding cost. If you plan to sell the property in the future, especially in the short term, you may also be subject to the Seller’s Stamp Duty (SSD), which serves as an additional penalty for short-term speculation and helps stabilize the real estate market.
