Stamp Duty Guide: What to Know About Your Property’s Stamp Duty

 

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When it comes to buying a home, cost is always a major factor. It’s always ideal to find a property that provides you with what you need—space for your family, easy access to and from work or a taste of living all on your own in your space—all at the right price. However, rising stamp duties can make property process go sky-high.

What is Stamp Tax?

Stamp duties, also known as stamp taxes, are a kind of tax that’s levied on legal documents involving the transfer of any assets or property you have, says the Inland Revenue Authority of Singapore. Legal documents include lease or tenancy agreements as well as transfer documents for properties. Mortgages for properties are also taxed. So with every sale or purchase of a home, the following duties apply: buyer’s stamp duties or BSD, additional buyer’s duties or ABSD and seller’s duties or SSD.

When Do You Need To Stamp?

You need to have the document stamped before you sign it. On the other hand, if you signed the document first and the following conditions apply, you will not get a penalty so you won’t have to worry about paying off any penalty charges:

  • Have the document stamped within the next 14 days if the document was signed in Singapore
  • Have the document signed within 30 days if the document was signed overseas and had to be sent to Singapore

If you go beyond the 14 days, though, you’ll find your hands full dealing with penalty charges.

Where Do You Go To Get a Stamp?

Get your documents taken care of by heading over to the following places: go to the e-stamping website, service bureaus and e-terminals at the IRAS surf centre.

What Happens When You’re Late?

As with most late payments, penalty charges apply. If your documents aren’t stamped, were stamped late or insufficiently stamped, you might end up shelling about as much as four times the normal tax. So do your best to keep that from happening by having your documents taken care of right within the given time frame.

How Do You Calculate The Costs?

You can use a tax calculator to figure out how much your first property is going to cost you. Buyers of private residential homes in Singapore now pay about three percent for their home purchases. Those who want to pick up a second home, though, must pay an additional seven percent. That’s whole a lot, especially when you stack it onto the rest of what you have to pay for in the process.

What’s The Advantage of Using a Stamp Tax Calculator?

The most important advantage is that it gives you a precise figure in your head. After all, buying a home doesn’t just mean you have to save up for a down payment and monthly mortgage bills. Now you have to factor in closing costs along with stamp duty fees as well and that could take quite a toll on your financial resources. You have insurance premiums on top of utility bills and even home owner’s dues and property taxes too. So you want to make sure you don’t run short of funds. Nothing’s scarier than the idea of skipping or defaulting on your payments to the point that the bank gets to repossess your home. Nobody wants to lose their property to a foreclosure. So before all that happens, make sure you have the financial wherewithal to cover the costs and that means all of them. Which is a lot.So assess where you are financially. You can start by finding out how much you need to spend on stamp duty with PropertyGuru Singapore calculator.

WhatTo Do When You’ve Figured out How Much?

Knowing the total cost of your stamp duties with a calculator can tell you whether you can afford a home or not. If you think your funds can only cover the down payment—barely—and not much else, then it might make better sense for you, from a financial standpoint—to wait it out until you have enough to cover those costs. That or you could adjust the price range for the home you want. There are plenty of ways you can make it work, so long as you’re willing to compromise or make the necessary adjustments.

What’s The Difference BetweenNew and old Properties?

By using the calculator, you’ll how much the price hikes up with every new property you buy. So while first-time buyers might not be too bothered by taxes, property investors are going to have a bit of a hard time acquiring properties. It’s causing havoc for developers too since they need to unload the properties before the new stamp rates take effect and plenty are dropping property prices, which could possibly lead to higher prices in the short-term.

Who Needs To Pay For Stamp Tax?

This largely depends on the kind of document being processed. Know which category you fall into and what you need to pay for:

  • Buyer – Buying the property? You’ll have to cover the costs of buyer’s stamp tax and any additional buyer’s tax for any succeeding properties.
  • Seller – Selling or de-acquisitioning a property? You’ll need to pay for seller’s tax.
  • Transferee – Are you distributing your assets, transferring property as a gift to one of your heirs or have documents of transfer to process? Then you’ll need to pay for on these papers as well.
  • Beneficiary or Trustee – If you have legal documents that include the trust deed or declaration of trust or a settlement processed, then you have to pay duties on these as well.
  • Parties involved in any partition or exchange – If you’re a part of any partition or the exchange of any property, then you need to have those documents duly stamped and signed.
  • Lessee – Renting out your property? You’ll need to pay for a stamp on your leases with premium.
  • Tenant – Just starting out as a tenant? You need to shell out money to have the novation assignment of lease with additional consideration document stamped.
  • Landlord – You have to pay for stamp taxes levied on the Surrender of Lease with payment document
  • Tenant – If you’re an existing tenant, then make sure you have the following legal documents stamped aside from your tenancy agreement: the agreement for lease, agreement for variation of lease and acceptance to the letter of offer.

 What Are Other Things You Need To Know?

 You should always stay on top of the payment schedule for your stamp duty. That way, you can avoid spending on penalty charges that do nothing but add more to what you’ll already have to spend on a home.

Buying a home is fraught with a lot of financial risks. Considering how much you’ll lose if you end up unable to to keep up with your payments, do your best to assess the situation from an objective point of view and see if buying a home is the best decision you can make or the worst. Be mindful of these things, if you don’t want a financial disaster on your hands.


Categories: Real Estate

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June 10, 2016 Stamp Duty Guide: What to Know About Your Property’s Stamp Duty