7 Dec 2011
The Government announced today an Additional Buyer’s Stamp Duty (ABSD) to be imposed on certain categories of residential property purchases. The ABSD will be imposed over and above the current Buyer’s Stamp Duty, and will apply to the purchase price or market value of the property (whichever is higher) for the following purchases:
The Government announced today an Additional Buyer’s Stamp Duty (ABSD) to be imposed on certain categories of residential property purchases. The ABSD will be imposed over and above the current Buyer’s Stamp Duty, and will apply to the purchase price or market value of the property (whichever is higher) for the following purchases:
a) Foreigners and non-individuals[1] (corporate entities) buying any residential property will pay an ABSD of 10%;
b) Permanent Residents (PRs) owning one[2] and buying the second and subsequent residential property will pay an ABSD of 3%; and
c) Singapore Citizens (Singaporeans) owning two[2] and buying the third and subsequent residential property will pay an ABSD of 3%.
The ABSD will take effect on 8 Dec 2011[3]. Remission of ABSD will be given for options granted on or before 7 Dec 2011 and exercised within 3 weeks (i.e. on or before 28 Dec 2011) or the option validity period, whichever is the earlier.
The Government's objective is to promote a sustainable residential property market where prices move in line with economic fundamentals. Prices of private residential properties have continued to rise, albeit more slowly in the last two quarters. Prices are now 13% above the peak in 2Q1996 and 16% above the more recent peak in 2Q2008.
Even with the current economic uncertainties, the demand for private residential property remains firm. Given the uncertainty in stock markets and with interest rates remaining low, private property in Singapore continues to attract investors, local and foreign. Excessive investment demand will however make the property cycle more volatile, and thus increase the risks to our economy and banking system.
The Government has therefore decided to impose the ABSD to moderate investment demand for private residential property and promote a more stable and sustainable market. A higher ABSD rate for foreign buyers in particular is necessary, in view of the large pool of external liquidity and strong buying interest from abroad, and the relatively small size of the Singapore market. Foreign purchases account for 19% of all private residential property purchases in 2H2011, up from 7% in 1H2009.
The ABSD will apply in addition to the existing Buyer’s Stamp Duty on property purchases, which are applied at following rates: 1% on first $180,000 of purchase consideration or market value of the property (whichever is higher), 2% on the next $180,000 and 3% for the remainder.
For purchases made jointly by two or more parties (e.g. a Singaporean with a PR, or a PR with a foreigner), the higher applicable ABSD rate will be imposed. For example, if a citizen purchases a property with a foreigner, the ABSD of 10% will apply. In the case of a joint purchase by Singaporeans, who each already owns properties, the ABSD of 3% will apply as long as one of the purchasers already owns two properties.
For purchases made jointly by two or more parties (e.g. a Singaporean with a PR, or a PR with a foreigner), the higher applicable ABSD rate will be imposed. For example, if a citizen purchases a property with a foreigner, the ABSD of 10% will apply. In the case of a joint purchase by Singaporeans, who each already owns properties, the ABSD of 3% will apply as long as one of the purchasers already owns two properties.
Singaporean first time buyers and upgraders, and buyers of HDB flats[4] will not be affected by the new measure. Certain reliefs will be provided so that the measure will not impact home occupation demand by residents. For example, relief will be provided for Singaporean-foreigner/PR married couples buying their homes. Reliefs will also be provided for qualifying developers and for purchases falling within the scope of Singapore’s international trade agreements. More details will be provided on the IRAS website.
[1] This includes corporate, trusts and collective investment schemes amongst others.
[2] A person is regarded as owning a property for the purpose of ABSD as long as he owns part of that property. Overseas properties will be excluded from the count of properties owned.
[3] The measure will apply to a property purchase if the option for purchase is exercised or the agreement for transfer is executed, whichever is earlier, on or after 8 Dec 2011. Where no option for purchase is granted and only an agreement for transfer is executed, then the measure will apply to the agreement for transfer if it is executed on or after 8 Dec 2011.
[4] The purchase of HDB properties will not be affected by this measure. Only Singaporeans and Permanent Residents are eligible to be HDB flat lessees (i.e. own a flat). Existing residential property owners who buy an HDB flat or a new unit under the Design, Build and Sell Scheme (DBSS) or the Executive Condominium (EC) Housing Scheme will not be subject to the ABSD, since the existing flat/property will have to be disposed of as part of the conditions for the purchase of the HDB/DBSS flat or EC unit.
Additional Buyer Stamp Duty (ABSD)
MAS have implement additional measures to cool the property prices in Singapore. The changes are
- Foreigners and company buying residential property will be paying 13% stamp duty instead of 3%
- Permanent residents (PR) buying a 2nd property will be paying 6% stamp duty instead of 3%
- Singaporean buying a 3rd property will also be paying 6% stamp duty instead of 3%
Stamp Duty remains the same (3%) for PR buying 1st property and Singaporean buying 1st and 2nd property.
Additional Buyer Stamp Duty (ABSD) will take effect from 8th Dec 2011.
Formula to calculate stamp duty:
3% or 6% or 13% (depending on your situation stated above) x Property Purchase Price – $5400
http://www.iras.gov.sg/irasHome/page_ektid12832.aspx
http://www.iras.gov.sg/irasHome/page_ektid12832.aspx
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