What is buyer stamp duty?

What is a buyer stamp duty?

Do you want to buy property in Singapore? If so, there are a lot of things you need to learn about house purchasing in Singapore. First, the cost of buying a house in Singapore is very expensive. Singapore is the second country in the world when it comes to having the most expensive prices for properties. One of the factors that make house purchasing expensive in Singapore is the buyer’s stamp duty.

What is the buyer’s stamp duty?

Basically, stamp duty refers to the tax on documents that are issued when you lease or buy property in Singapore. Both the homebuyer and the seller have a stamp duty to pay. However, the most notable is the buyer’s stamp duty or BSD. It should be paid by the homebuyer in 14 days after the date of Sale & Purchase Agreement or Option to Purchase. That is the case if the said document was signed in Singapore. However, if it was signed overseas, the BSD should be paid before the 30 days end. Usually, the stamp duty cost of buying a house in Singapore is paid during the first stage of the purchase agreement. 

Not paying the stamp duty is a serious offense in Singapore. Furthermore, documents that use unpaid stamp duty are not considered valid. This means that if a disagreement arises between the seller and house buyer, the Sale & Purchase Agreement cannot be used in court as evidence. Thus, it is a must that the stamp duty is paid when you buy property in Singapore.

The amount paid for a BSD is based on a percentage of the selling cost of buying a house in Singapore. It is computed based on compounding rates. If you buy a house worth S$3,000,000.00, the first S$180,000 will have a stamp BSD rate of 1%. The next S$180,000 will have a higher BSD of 2%. Then, the next S$640,000 will have a 3% stamp duty. Then, the remaining S$2,000,000.00 will have a 4% for stamp duty. Thus, if you compute this, the stamp duty amount for a 3 million Singaporean dollar house is S$104,600.00. Therefore, it is recommended that you do a computation of the stamp duty price before you buy property in Singapore.

What is an additional buyer stamp duty?

Additional buyer stamp duty or ABSD is paid on top of the existing BSD. This is an added document tax that is added to the cost of buying a house in Singapore. It is paid by only certain types of home buyers. It was first introduced on December 7, 2011. It was done in order to cool down the residential real estate industry. It was further revised on January 12, 2013, because of the further acceleration in the escalation of house prices. 

The percentage of ABSD depends on two factors: the purchaser’s citizen type and the number of times they buy property in Singapore. A Singapore citizen doesn’t need to pay an ABSD if it is their first property purchase. However, their second property purchase will have a 12% ABSD. While their third purchase will have a 15% ABSD. As for a Singapore permanent resident, they need to pay 5% ABSD if it is their first time to buy a house. The second and third time will have an ABSD of 15%. If they bought houses more than three times, the ABSD for the third time will be the ABSD of the succeeding.

Foreigners should pay 20% ABSD for every house property they buy in Singapore. For corporal entities, they will pay 25% ABSD for each property bought. Thus, foreigners and entities need to pay higher document tax included in the cost of buying a house in Singapore.

What happens if the buyer’s stamp duty is not paid on time?

As mentioned, there is a deadline for paying BSD and the ABSD. They are 14 days if the document is signed in Singapore and 30 days if overseas. If the deadline is not met, the IRAS will charge a penalty for late stamping. For late stamp duty payments not exceeding three months, S$10 or an amount equal to the stamp duty, whichever is higher, is paid. For those exceeding three months, S$25 or four times of the duty payable, whichever is higher, is the penalty. Thus, to avoid this penalty cost of buying a house in Singapore, pay the stamp duty on time.

Learn more about buying a property in Singapore

Buyer stamp duty is only one of the important requirements when purchasing a property in Singapore. If you wish to learn more about the house purchasing requirements in Singapore, head to SRX Property. This website has all the articles relating to property purchasing in Singapore. Be a smart property buyer and learn more!

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