Learning The Basics: Property Stamp Duty In Singapore

If you purchase or rent a property in Singapore, you have to pay the government a tax amount called Stamp duty. Different activities regarding properties in Singapore, buying or renting, are subject to different stamp duty rates. In this article, BBCIncorp will provide you with crucial information about different aspects of this kind of property tax in Singapore.

Overview of property stamp duty in Singapore

Let’s start with the definition. Stamp duty generally is a tax imposed on dutiable documents that relate to fixed property (immovable property) and shares or stocks in Singapore. Particularly, dutiable documents for properties comprise:

• Lease agreement/contract for properties (when you rent properties);
• Transfer document for properties (when you buy or sell properties);
• Mortgages for properties (when you mortgage properties for loans);

On the other hand, there are some non-dutiable documents for which you do not need to pay stamp duty:

• Assignment of intangible assets such as Goodwill, Trademark and Patents;
• Assignment of book debts or receivables (e.g. sale proceeds);
• Charter-party;
• Declaration to change from Joint Tenancy to Tenancy in Common in Equal Shares;
• Declaration to hold as Joint Tenants (by Tenants in Common in Equal Shares);
• Deed of Appointment of Trustees – where it does not involve vesting of interest;
• Fixed and nominal duty documents other than Declaration of Trust dated on and after 19 Feb 2011;
• Hire Purchase Agreement;
• Letters of Appointment or Revocation of Power of Attorney;
• Letters of Guarantee or Indemnity;
• Loan agreements that do not relate to properties and shares;
• Promissory Note;
• Service contracts that do not relate to a lease granting;
• Settlement that does not relate to properties and shares;
• Statutory Declaration, Affidavit;
• Will;
• Insurance documents.

Stamp duty on property lease in Singapore

Normally, the tenant is the one who is going to pay stamp duty on lease of immovable properties in Singapore unless it is stated in the rental contract that the owner pays for it. Stamp duty on leases is calculated based on the following formula:

*Average Annual Rent (AAR) is the average annual contractual or annualized market rent, whichever is higher, including other additional payments (for furniture charge and advertising charge for examples).

**Lease duty rates depend on AAR and lease period. To be more specific:

AAR is $1,000 or less: Not applicable (exempted)

AAR is more than $1,000:

• 0.4% of total rent amount over the whole lease period when the lease period is 4 years or less
• 0.4% of 4 times the AAR for the whole lease period when the lease period is more than 4 years or indefinite 

Let’s look into the two following examples so that you can understand better how to calculate stamp duty on leased properties in Singapore.

Example 1: Whole lease period is less than 4 years

Leasing period break down:

• First year: $3,000 per month
• Second year: $4,000 per month
• Third year: $5,000 per month

The payable stamp duty on leasing property is calculated as follow:

• Total rent = (3,000+4,000+5,000) x 12 = $144,000
• Stamp duty = 0.4% x 144,000 = $576

Example 2: Whole lease period is more than 4 years

Leasing period break down:

• First year: $3,000 per month
• Second year: $4,000 per month
• Third year: $5,000 per month
• Fourth year: $5,500 per month
• Fifth year: $6,000 per month

The payable stamp duty on leasing property is calculated as follow:

• Total rent = (3,000+4,000+5,000+5,500+6,000) x 12 = $282,000
• Average Annual Rent = 282,000/5 = $56,400
• Stamp duty = 0.4% x 4 x 56,400 = $902

Stamp duty on Singapore property transfer

Property transfer includes purchase and acquisition or disposal of property. There are three kinds of stamp duties imposed on these activities:

• Buyer’s stamp duty (BSD);
• Additional buyer’s stamp duty (ABSD);
• Seller’s stamp duty (SSD).

Buyer’s Stamp Duty in Singapore

Buyer’s stamp duty (BSD) in Singapore is a tax you have to pay on the purchase document when buying a property. BSD of a property is calculated based on the price stated on the purchase document (purchase price) or the market value of that property, whichever is higher. The applicable BSD rates are:

Example 3: if you buy a non-residential property (an office or a factory) with the purchase price of $1.2 million, then you have to pay [(180,000 x 1%) + (180,000 x 2%) + (640,000 x 3%) + (200,000 x 3%)] = $20,600.

Additional Buyer’s Stamp Duty in Singapore

When you purchase residential properties (residential land for example), you need to pay an additional buyer’s stamp duty (ABSD) in Singapore. The ABSD liability will be determined based on your profile (the buyer) at the purchase time of a residential property, including:

• The fact that you are an individual or an entity;
• Your residency status;
• The number of residential properties you have owned.

Similar to BSD, ABSD is also computed based on the property’s purchase price or market value, whichever is higher. The applicable ABSD rates will depend on the 3 stated factors above:

Example 4:

Assume that you are a foreigner buying your first condominium (residential property) in Singapore for $1 million, you have to pay stamp duty including both BDS and ABDS:

BDS = [(180,000 x 1%) + (180,000 x 2%) + (640,000 x 3%)] = $24,600.

ABDS = 1,000,000 x 20% = $200,000.

Total payable stamp duty = $24,600 + $200,000 = $224,600.

Seller’s Stamp Duty in Singapore

Seller’s stamp duty (SSD) is a tax amount that a seller has to pay when selling a property after a holding period if that person buys and acquires that property after 2010 (in case it is a residential property) or after 2013 (in case it is a non-residential property).

The applicable rates (on selling price or value market of a property, whichever is higher) vary according to types of properties:

Residential Property’s SSD rates based on holding period (On or after 11 March 2017)

• Up to 1 year: 12%
• More than 1 year but no more than 2 years: 8%
• More than 2 years but no more than 3 years: 4%
• More than 3 years: Not applicable

Non-residential Property’s SSD rates based on holding period (On or after 12 January 2013)

• Up to 1 year: 15%
• More than 1 year but no more than 2 years: 10%
• More than 2 years but no more than 3 years: 5%
• More than 3 years: Not applicable

Example 5: If you bought a residential property in August 2018 and sold it in July 2019 for $1 million (holding period is less than a year), you would pay SSD = 12% x 1,000,000 = $120,000.

When and how to pay property stamp duty in Singapore

For properties in Singapore, you need to pay stamp duty and stamp a document within the following period:

• Within 14 days after the date that document is signed in Singapore; or
• Within 30 days after the date that document is received in Singapore if it is signed abroad.

There are 3 ways for you to pay and get your document stamped:

• Through e-stamping portal;
• Through service bureaus;
• At Taxpayer & Business Service Centre.

Main points to remember

Whenever you buy or rent properties in Singapore, you normally are subject to property stamp duty in Singapore.

• The property stamp duty rates are different according to different activities.
• You need to pay stamp duty within 14 days when you sign a document in Singapore or within 30 days when you sign a document overseas and receive it in Singapore.
• There are 3 ways to get your property document stamped, in which using e-stamping portal is the most convenient.

Should you have further questions about tax system in Singapore, please talk to our experts now! BBCIncorp is always willing to help!