Property tax for foreign buyers increases in Singapore
Singapore has increased a tax on foreign property buyers as part of new temporary measures to cool its residential housing market which has seen continued strong demand despite previous efforts to curb prices.
Foreigners and corporates who buy residential property in Singapore will now be subject to an additional buyer’s stamp duty (ABSD) of 15% of the purchase price, up from the previous 10%.
Singapore citizens buying their second homes will be hit with an ABSD of 7% while people with permanent residency status will pay an additional stamp duty of 5% on their first home purchase.
The ABSD had previously applied to citizens buying their third residential property and permanent residents getting their second.
On top of the additional stamp duty, individuals applying for a second or subsequent housing loan will have to make a minimum cash payment of 25%, up from 10%.
The new measures also see the introduction of a new seller’s stamp duty of 5 to 15% for those who buy and then sell industrial properties such as warehouses and factories within three years.
Singapore private home prices increased by 1.8% in the fourth quarter of 2012, up from 0.6% in the previous quarter. Resale prices of government-built HDB apartments which are generally bought by Singaporeans, increased by 2.5%, quarter on quarter, the fastest gain in five quarters. And industrial property, prices are now double the levels of three years ago.
‘Interest rates are extraordinarily low, globally and in Singapore, and continue to add fuel to our property market. We have to take this further round of measures now, to check recent market trends and avoid a more serious correction in prices further down the road,’ said Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam.
Interest rates in Singapore have fallen to near record lows with banks charging as little as 1% per annum on housing loans.
In its statement, the Singapore government claimed that most citizens buying their first home will not be hurt by the new measures. Some concessions will also be extended to selected groups of buyers, such as married couples with at least one Singaporean spouse who are purchasing their second property so long as they intend to sell their first residential property.
The government added that the new measures are temporary and will be reviewed in future depending on market conditions.