Property-Related Taxes in Singapore

Nonresidents are generally subject to Singapore income tax on Singapore-sourced income. Married couples are generally assessed separately for income-tax purposes.

Income Tax

Nonresident individuals are subject to different tax rates depending on the nature of their income.

Employment income is taxed at 15% or the resident progressive rates, whichever produces the higher tax liability. Other income earned by a nonresident individual, including rental income from Singapore property, is generally subject to tax at a flat rate of 24%.

Rental Income Tax

Rental income earned by a nonresident individual from Singapore real estate is generally subject to income tax at a flat rate of 24%.

Tax is imposed on net taxable rental income rather than automatically on gross rent. Qualifying expenses incurred in producing the rental income can generally be deducted, subject to Singapore's tax rules.

Accordingly, the 24% rate should not be interpreted as an effective tax of 24% of gross rental receipts where deductible rental expenses are available.

For a nonresident individual renting out a residential property in Singapore, annual gross rental income of $18,000, $72,000 and $144,000 results in estimated income tax of $3,672, $14,688 and $29,376, respectively.

The calculation assumes the 15% deemed rental-expense deduction available for qualifying tenanted residential properties. Consequently, 85% of gross rental income is treated as net taxable rental income for this calculation.

Applying Singapore's 24% nonresident income-tax rate produces an effective income-tax burden equal to approximately 20.4% of gross rental income.

Capital Gains Tax

Singapore does not generally impose capital gains tax. Therefore, a gain realized by an individual from the disposal of a Singapore property held as an investment is generally not taxable.

However, where the circumstances indicate that the taxpayer is trading in properties or acquired the property with a profit-making or trading purpose, the gain can be treated as taxable income rather than a capital gain. Factors considered can include the frequency of transactions, purpose of acquisition and disposal, financial capacity to hold the property and the length of the holding period.

Corporate Tax

Singapore companies are generally subject to corporate income tax at a headline rate of 17% of chargeable income.

Rental income earned through a company is included in taxable income, while qualifying expenses incurred in producing that income can generally be deducted in determining chargeable income.

Tax exemptions and rebates can reduce the effective corporate tax burden for qualifying companies, so the 17% rate represents the headline rate rather than necessarily the effective rate in every case.

Property Acquisition Taxes

Foreign individuals purchasing Singapore residential property face particularly high acquisition taxes.

In addition to ordinary Buyer's Stamp Duty (BSD), a foreign individual purchasing residential property is generally subject to Additional Buyer's Stamp Duty (ABSD) at 60% of the higher of the purchase price or market value.

BSD itself is progressive, with rates ranging from 1% to 6% for residential property.

Consequently, acquisition costs for a foreign residential investor can be exceptionally high. The total cost depends on the purchase price, eventual sale, holding period, applicable Seller's Stamp Duty and other transaction-specific factors.

Property Buying Costs and Transaction Taxes in Singapore

Property Holding Tax

Singapore imposes an annual property tax based on the Annual Value (AV) of the property. Annual Value broadly represents the estimated annual market rent that the property could generate.

A residential investment property that is rented out is subject to the non-owner-occupier residential property-tax rates, which are progressive.

The current rates are:

• First S$30,000 of Annual Value: 12%

• Next S$15,000: 20%

• Next S$15,000: 28%

• Annual Value above S$60,000: 36%