Singapore stamp duty increases - Introduction
Singapore announced significant increases in the Additional Buyer's Stamp Duty (ABSD) rates effective from April 27, 2023.
This move comes after perceived successes of past moderating measures which were effective from December 16, 2021, and September 30, 2022, respectively.
Increases in ABSD are targeted
The increases in ABSD rates aim to prioritize Singapore citizens' acquisition of homes for owner-occupation, dampen local and foreign investor demand for residential properties, and deter foreign investors from viewing local residential properties as an attractive investment class.
The ABSD rates for Singapore citizens and permanent residents have been increased by between 3% and 5% for purchases of their second and third residential properties.
Foreign investors
Meanwhile, foreign investors will have to pay twice the previous rate, with ABSD being raised from 30% to 60% for any residential property purchase.
Corporations, entities that are not housing developers, and trustees acquiring residential properties will also be subjected to ABSD, which has been increased from 35% to 65%.
According to the Inland Revenue Authority of Singapore (IRAS), the following aspects of the buyer's profile as at the date of purchase or acquisition of the residential property will determine the ABSD rate:
- Whether the buyer is an individual or an entity
- The profile of the buyer (Singapore citizen, Singapore permanent resident, or foreigner)
- The number of residential properties owned by the buyer (excluding all residential properties located outside Singapore)
- Whether the residential property is to be held in a living trust
Singapore stamp duty increases - The new rates in full
The new ABSD rates for acquisitions made on and after April 27, 2023, are as follows:
| Type of transaction | Rate of tax |
| Singapore citizens buying first residential property | 0% |
| Singapore citizens buying second residential property | 20% (3% increase from 17%) |
| Singapore citizens buying third and subsequent residential property | 30% (5% increase from 25%) |
| Singapore permanent residents buying first residential property: | 5% |
| Singapore permanent residents buying second residential property | 30% (5% increase from 25%) |
| Singapore permanent residents buying third and subsequent residential property | 35% (5% increase from 30%) |
| Foreigners buying any residential property | 60% (30% increase from 30%) |
| Entities buying any residential property | 65% (30% increase from 35%) |
| Housing developers buying any residential property | 35% (non-remittable), plus additional 5% (non-remittable) |
| Trustees buying any residential property | 65% (30% increase from 35%), effective from May 9, 2022 |
The IRAS has also set out a transitional provision whereby ABSD rates before April 27, 2023, will apply to buyers meeting the following conditions:
- The option to purchase (OTP) is granted by sellers to potential buyers on or before April 26, 2023.
- The OTP is exercised on or before May 17, 2023, or within the OTP validity period, whichever is earlier.
- The OTP has not been varied on or after April 27, 2023.
The IRAS has indicated that it will not extend the deadlines in the ABSD transitional remission rules, even in cases where the validity period of the OTP extends beyond or commences after May 17, 2023.
Will this prompt a slowdown?
The ABSD increase may cause a slowdown in the real estate market as investors and buyers may be deterred by the higher stamp duty rates.
This could potentially affect developers who may face lower demand for their projects.
However, the government has stated that these measures are necessary to maintain a stable and sustainable property market in Singapore.
Singapore stamp duty increases - Conclusion
In conclusion, the recent announcement by the Ministries of Finance and National Development, and the Monetary Authority of Singapore, to increase the Additional Buyer's Stamp Duty (ABSD) rates, shows the Singaporean government's commitment to maintaining a stable and sustainable property market.
The new ABSD rates, effective from 27 April 2023, aim to prioritize Singapore citizens acquiring homes for owner-occupation, pre-emptively dampen local and foreign investor demand for residential properties, and ensure that the Singapore property market remains affordable for its citizens.
It remains to be seen how these changes will affect the property market in the long run, but the government's proactive approach to managing the market is a positive sign for Singapore's future economic stability.
If you have any queries relating to Singapore stamp duty increases , or Singaporean tax matters more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.