3 key things you need to know as a foreign investor in Singapore property market
The little red dot, Singapore, are known for many reasons like world’s most expensive city for expats for 4 straight years by the Economic Intelligence Unit (EIU) in year 2017. The high cost is justifiable, in a way. The high standards of living through Singapore’s everyday life and the availability of top jobs and companies settling their base in Singapore that resulted increasing influx of expatriates relocating to the country. Every real estate’s secondary market (except retail market) in Singapore has shown signs of rapid recovery after analysts have presumed they are currently bottom out. Therefore, with counter-cyclical opportunities in abundance, this will entail question of ‘how-to-invest’ by foreign investors that are looking to tap into the market. Though what may seems like profitable investing in Singapore but foreigners still will have to their property tax in Singapore as well, FYI. Nonetheless, here is a guide that simplifies for foreigners to invest properties in Singapore.
On understanding Singapore’s property type and guidelines
Before you start investing in properties, you ought to fully understand the type of properties available in Singapore real estate market. It is essential to understand there are no restrictions in buying commercial or industrial properties unlike residential properties.
There are handful list of properties/lands that foreigner investors are not allow to purchase unless he/she obtains the prior approval from the Land Dealings Approval Unit (LDAU) from the Singapore Land Authority:-
- Vacant Residential Land
- Landed Property
- Landed Property in strata developments which are not approved condominium developments under the Planning Act
Then, what we have here is the list of non-restricted residential properties which can be purchased under the aforesaid act:-
- Any apartment within a building
- Any unit in an approved condominium development under the Planning Act (Note: A foreign person is not allowed to acquire all the apartments within a building or all the units in an approved condominium development without the prior approval)
- A leasehold estate in restricted residential property for a term not exceeding 7 years, including any further term which may be granted by way of an option for renewal
With this, you will be able to decide on the market or property type that you want to invest in.
On property costs
Next, you are going to get that property you have aimed for. You can reach out to the seller or an estate agent to show your intent and interest and reach the agreement on the price. That’s where you will need to take down on the list of costs where your cash needs to pay in order to legalize the transactions.
Options to Purchase (OTP)
This will costs you to pay cash upfront, usually 1 to 5% of the property price that entitles you to an exclusive right to purchase the subject property within a period of about 3 weeks, your lawyer will inform you about the OTP and sign the documents.
Sale and Purchase Agreement (SPA)
Here are the costs after exercising the option:
- *Stamp duty: up to 3% of property value
- Legal fees: basically fees for the property lawyer which costs about 0.3% of the property price
- Agent fees: typically about 1%
- Registration fees for the ownership title of the said property
*Stamp duty
Let’s talk about stamp duty which is essentially part of the property tax you will need to bear. There are two types payable for buyer which are Buyer’s Stamp Duty and Additional Buyer’s Stamp Duty.
Buyer’s Stamp Duty (BSD) – payable for all type of property purchased and the amount is based on the purchase price or the market value of the property.
Additional Buyer’s Stamp Duty (ABSD) – payable only for the purchase of residential properties, like BSD, amount is based on the purchase price or the market value of the property.
On annual taxes
After you have completed the first two, congratulations on the successful transactions. Then, there is this annual tax you will need to pay although you are a foreigner in Singapore.
1.Property taxes
With the guidelines from IRAS, here is how you calculated your annual property tax.
Annual property tax = Annual value of property (AV) x Tax rate payable
AV is an adjusted figure of the projected annual rent that you could have earned from the property based on the current market conditions. As for tax rate, it is on a progressive basis of between 0 to 16% depending on the AV of the property
2.Rental income taxation
It only applies when you earn rental income from the property you purchased. You will have to declare the amount on your income tax return statement form, under the section of ‘Other income: rent from property’.
Taxable rent income = Annual rent – Deductible costs
Costs include: interest paid for home loans, property taxes, fire insurance, maintenance costs and utility bills.
In all, these guides should be able to help you be mindful when buying your property investment in Singapore.
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Best kan kalau ada investment atau properties dekat Singapore
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Helpful post lots of information about it, Thank you admin for providing this information.