Buyer Stamp Duty(BSD) and Additional Buyer Stamp Duty (ABSD)

ABSD and BSD

Just what is Additional Buyer Stamp Duty (ABSD) and Buyer Stamp Duty (BSD)?

When buying real estate in the Singapore property market, you aren’t just paying the price of the property. A wide range of taxes and duties may require your attention, and because of the sheer size of the investment, your escrow fees may also be high.  

Stamp duties are a major factor in the cost of a property and consist of a culmination of the associated taxes that you will have to pay. These duties need to be paid to the Inland Revenue Authority of Singapore (IRAS), who can then authorize the purchase or lease of a property.

Of course, the more documents involved in the buying process, the more your stamp duties will be, which is why these are important to consider for anyone looking to build wealth with real estate. These duties are almost always applicable when buying property in Singapore. 

In this article, we shall go over some of the most important elements of a stamp duty, respective rates, and what you as a buyer will need to do. 

 

What Does Buyer’s Stamp Duty Mean (BSD)?

Buyer’s Stamp Duty (BSD) represents a tax levied on BUYERS ONLY whenever a HDB flat, condo, bungalow, mansion, or any other piece of property is sold. As mentioned previously, the amount of BSD charged on your will depend on your transaction size. 

More specifically, the IRAS will consider the higher purchase price and the property’s market value. Where the former will be stated in the signed sale and purchase agreement, the latter will be based on government’s own or an independent third party’s property valuation reports. 

Suppose your property’s asking price was based on the valuation reports and amounted to $1 million. However, you managed to bring the price down to $800,000, you would still be charged a buyer’s stamp duty based on $1 million. 

The duties are levied directly on the property’s duties papers. Any paper without its stamp duties paid will not be admissible in the eyes of the law. 

 

How Much Buyer Stamp Duty (BSD) Do I Have to Pay?

Before 2018, there was a flat fee on all properties sold or purchased. The rate was up to 3% for the Singapore property market as a whole. However, in February of the same year, the government introduced a ‘tiered’ structure for calculating BSD. There is also a question of whether the property being purchased is residential or commercial in nature. 

The previous rates suggested that the first $180,000 from the total amount would be charged at 1%, and the next at 2%. The remaining amount would be charged at 3%. For example, if the property you purchased was for $1 million, the buyer’s stamp duty you’d have to pay would amount to $24,600. 

After revision, though, the rates looked something like this:

Purchase Price

Residential Property

Non-Residential Property

First $180,000

1%

1%

Second $180,000

2%

2%

Next $640,000

3%

3%

Remaining Amount

4%

 

If we consider a $1.5 million residential property, a citizen Singaporean buyer’s stamp duty would be $44,600 ($1,800 + $3,600 + $19,200 + $20,000). However, if the property was commercial or industrial, you would then have to pay $24,600 ($1,800 + $3,600 + $19,200).

You can also use a buyer stamp duty calculator to calculate how much you’d have to pay when investing in Singapore real estate. 

As you can see, the residential property buyers have been hit hardest by the 1% increase in tax rates. This is Singapore’s way of taxing the elite slightly more than the middle class. However, it is important to note that a majority of residential properties in Singapore are below the $1.5-million mark. The Singapore property market didn’t suffer any changes in demand. 

 

Additional Buyer Stamp Duty (ABSD)

Apart from the BSD calculated above, there is also the Additional Buyer’s Stamp Duty (ABSD) to consider. This is a duty charged by the government to control the rising prices of property, something that many other real estate markets suffer from. 

A major impact on how much ABSD you end up having to pay is the number of properties you are buying and the status of living, i.e., the additional buyer’s stamp duty is charged only when a Singaporean citizen buys more than one property, regardless of whether it is a condo or an HDB. 

While buyer’s stamp duties are charged on every purchase of property, the additional duty is only charged after the first purchase. However, for foreigners, dignitaries, or corporate entities, the ABSD is applicable along with the BSD every time they purchase a property, including the first time. 

Residence

Buyer

BSD Rate

ABSD Rate

Citizen

First Residential Property 

1% On First $180,000

2% On Next $180,000

3% On Next $640,000

4% On Remaining Amount

0%

Second Residential Property 

12%

Third Residential Property 

15%

Permanent Resident

First Residential Property 

5%

Second Residential Property 

20%

Third Residential Property 

25%

 

Buyer’s Stamp Duty Exemptions

In the following cases, you won’t have to pay BSD (or even ABDS for that matter). 

  1. Incomplete sale/purchase of property(s)
  2. Transfer of flat to a family member
  3. Transfer upon consolidation/reconstruction between associated entities
  4. Any property acquired before 20th February, 2018. 
  5. Residential land acquired for non-residential development

You will have to submit an application to the IRAS within 14 days of acquiring said property if you want to apply for the exemption. You will need:

  • A copy of the acquisition letter
  • Letter of undertaking 
  • Other documents to showcase transfer of title.
  • A copy of your NIC

You must pay your buyer’s stamp duty within 14 days from the date of sale execution if the transaction is within Singapore or within 30 days of the date documents are received in Singapore, in case of an international transaction. 

Failure to make payment will result in a demand note being sent to you as a gentle reminder by the IRAS for the payment. Within three months after the due date, you will be charged $10 as a fine along with the duty payable. Any later, and you’ll have to pay a fine of $25 and four times the actual duty payable!

Buyer’s stamp duties are a crucial part of the Singapore property market, so make sure you keep that in mind when investing, be it for wealth building with real estate or for living. We recommend checking out our calculator for an accurate assessment of how much you’ll have to pay, or give us a call and let us help you make an informed decision.

 

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