Stamp duty treatment for certain foreigners is the same as for Singaporeans

Did you know that nationals or permanent residents of five countries who purchase residential properties in Singapore enjoy the same stamp duty treatment as Singapore citizens?

On December 15, 2021, the government announced that ABSD rates would be raised from December 16, 2021, as part of a package of measures to cool the private residential and resale HDB markets. But nationals of these five countries, just like citizens of Singapore, are exempt from the current rate of Additional Buyer’s Stamp Duty (ABSD) levied on foreigners when buying residential properties. The ABSD for foreigners in Singapore is 30%.

For Singapore Citizens, regarding stamp duty treatment, there is no ABSD on their first residential property.

What is ABSD?

ABSD is a property tax which is levied in addition to the buyer’s stamp duty (a tax that property buyers have to pay when buying a property), and it is calculated based on the property’s valuation or sale price, whichever is higher. Responsible buyers are required to pay ABSD in addition to the existing Buyer’s Stamp Duty (BSD). ABSD and BSD are calculated on the purchase price as stated in the taxable document or on the market value of the property (whichever is greater).

How to calculate ABSD?

For example, say a property is appraised at $1 million but the sale price is $1.1 million. Assuming you are subject to 12% ABSD, the ABSD amount you will need to pay is $1.1 million X 12% = $132,000.

Who has to pay ABSD?

ABSD applies to the following buyer group:

  • Singapore Citizens: ABSD will be levied on second (17%) and subsequent property purchases (25%)

  • Singapore (PR) Permanent Residents: ABSD will be charged on all purchases. The first purchase will be 5% while the second purchase will be 25%, and the third and subsequent purchases will be 30%.

  • Foreigners: 30% ABSD for any real estate purchase

  • Entities (corporations or associations): 35% for each property (plus 5% additional non-refundable ABSD for developers)

processing of stamp duty

As a result of free trade agreements signed by the Singapore government, nationals and permanent residents of these five countries enjoy the same stamp duty treatment as Singapore citizens. The free trade agreements signed with the United States of America and the European Free Trade Association (EFTA) provide for these exemptions for residents of these countries.

Those who can benefit from this ABSD remission are:

  1. Nationals of the United States of America; and

  2. Nationals and permanent residents of Iceland, Liechtenstein, Norway or Switzerland

This means that if you are a citizen of Iceland, Liechtenstein, Norway, Switzerland or the United States of America, instead of paying an additional 30% for ABSD, you do not need to pay any ABSD at all when buying your first residential property in Singapore. And the ABSD would be 17% for your second residential property and 25% for your third and subsequent properties.

This only applies to non-land private residential properties, as foreigners are not allowed to buy and own land in Singapore, the only exception being the luxurious waterfront bungalows on Sentosa Cove.

Eligible overseas investors can submit a rebate application through their legal representative who can manage their origination duty and transactions with the Inland Revenue Authority of Singapore (IRAS) on your behalf.

ABSD liability will depend on the profile of the buyer on the date of purchase or acquisition of the residential property:
A. Whether the buyer is an individual or an entity
B. The profile of the buyer and
C. The number of residential properties owned by the buyer

Is the buyer an individual or an entity for processing stamp duty

An entity means a person who is not an individual. It includes the following elements:

  • An association without legal personality

  • A trustee of a mutual fund when acting in that capacity

  • A trustee-manager of a business trust when acting as such

  • The partners of the partnership, whether or not one of them is a natural person, when the goods transported, transferred or disposed of must be held as property of the partnership

If a property is purchased jointly by buyers with different profiles, the profile with the highest ABSD rate will apply to the entire value purchased.

Yes A purchases residential property to be held in trust for the beneficial owner BABSD is invoiced according to the profile of the beneficial owner, B.

Buyer Profile

The applicable ABSD rate depends on the buyer’s profile on the date of purchase. You must have obtained Singapore citizenship status or Singapore permanent resident status by the Immigration and Checkpoints Authority (ICA) on the date of purchase of the property in order to qualify for liability Reduced ABSD. The date of issue reflected in the IC collection slip would be considered the date the status was granted.

When do you have to pay ABSD and BSD?

BSD and ABSD must be paid within 14 days of the date of the signed contract or agreement. Where the contract or agreement is executed (signed) overseas, BSD and ABSD must be paid within 30 days of receipt of the contract or agreement in Singapore. A document is considered duly endorsed only when the stamp duty is fully paid. Audit checks will be carried out by IRAS to ensure that BSD and ABSD are duly paid. Under the Stamp Duty Act, a penalty of 4 times the amount of unpaid duty may be imposed.

Can you defer payment of stamp duty?

Stamp duty is an upfront cost that a buyer should consciously set aside when deciding to purchase a property. It must be paid in full and cannot be deferred. Underpayment or late payment of stamp duty is equivalent to non-stamp and penalties would apply.

The ASBD was first introduced in December 2011 as a “chilling measure” to discourage foreigners and entities from buying residential properties, especially multiple properties. The latest round of cooling measures came into effect on December 16. In addition to the tightening of lending limits which saw the Loan-to-Value (LTV) limit for loans made by HDB increase from 90% to 85% and the Total Debt Service Ratio (TDSR) threshold tighten from 60% to 55%, ABSD rates have been adjusted.

Post-stamp duty treatment for some foreigners is the same as for Singaporeans that appeared first on iCompareLoan.

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