On 12 Jan 2013, the Government announced a revision of the Stamp Duty Tax as related to purchase of Residential Property by certain individuals. Originally introduced on 7 Dec 11, this is an additional tax to be levied on foreigners, Singapore Permanent Residents and specific Singaporean Citizens.
The old and new rates are as follows:
Foreigners: 10% -> 15%
PRs: Straight 3% past the #1 acquisition -> An increasing cost per property purchased.
– 5% on acquisition of 1st property
– 10% on acquisition of any property past the first.
Citizen: Straight 3% past the #2 acquisition -> An increasing cost per property purchased.
– 7% on acquisition of 2nd property.
– 10% on acquisition of any property past the 2nd.
Or simply refer to below chart.
Chart 1: New ABSD imposed on 12 January 2013 for purchase of property:
| Citizenship |
ABSD Rate on 1st Purchase |
ABSD Rate on 2nd Purchase |
ABSD Rate on 3rd Purchase |
| Singapore Citizens |
Existing: NA
Revised: NA |
Existing: NA
Revised: 7% |
Existing: 3%
Revised: 10% |
| Permanent Residents |
Existing: NA
Revised: 5% |
Existing: 3%
Revised: 10% |
Existing: 3%
Revised: 10% |
| Foreigners and non-individuals (corporate entities) |
Existing: 10%
Revised: 15% |
Existing: 10%
Revised: 15% |
Existing: 10%
Revised: 15% |
When you break it down, what does it all mean?
With this revised tax in place, the down payment of ‘indirect’ cost of purchasing a residential property for several groups of people will go up, and thus demand will drop. With dropped demand, the actual price of the properties themselves should also go down to match the demand.
The impact of ABSD for new launches are limited as developers would absorb most of it by offering ABSD discounts to offset the cost imposed on homebuyers. By doing so, the gross property price remain high but actual nett price will be lower. For first time homebuyers making their property purchase, this actually means a lower price instead when looking at the nett psf price. Demand may be lower as we had seen in 2012 and 2013 but there will be first time buyers looking to enter during this phase.
On the contrary, for the sellers’ end, what it means is a smaller pool of resale buyers as those who already owned their first property might be reluctant to pay the ABSD.
Looking at the resale figures for all non-landed residential properties, total volume in FY 2012 was 11,494 while in FY 2013, volume dropped to 6,033 or almost a 50 percent declined. The sellers will find it harder to dispose their existing properties and we would definitely expect to see a buyer’s market in 2014 if this trend persisted.
Chart 2:
We hope this has been helpful insight into your future plans of property investment. If you’re looking to take advantage of this opportunity, at Condo New Launches we have a wide variety of information on new properties for you to pursue.
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