Stamp duties are legal taxes in black and white. This is usually done in the transfer of property or assets to another client or party. This practice is also enforced in Australia, and in some states of the United States. In Singapore, this tax is practiced and enforced on the transfer of homes, infrastructure, and land. Other properties included in the enforcing of stamp duties are copyrights, patents, and other forms of security.
Stamp duties serves as a proof of payment from its consumers/ buyers.
The Start of Stamp Duties
Stamp duties were initiated after the passing of the Stamp Act in 1765 by the British Parliament. The exact time when the practice was first introduced in Singapore is unknown, but it was enhanced in December of 2011, when additional components of Stamp Duties were introduced and implemented.
Components or Forms of Stamp Duties
Stamp duties are used to describe the tax imposed on documents.
Three components:
- Buyer’s Stamp Duty
- Seller’s Stamp Duty
- Additional Buyer’s Stamp Duty
Buyer’s Stamp Duty and How it Works
Buyer’s Stamp Duty are taxes imposed on all purchases of property. This includes the purchase of HDB units, land, and all other properties that are residential, commercial, and industrial.
While stamp duty is payable on the actual price on the market, it is the buyer’s utmost responsibility and priority to pay to ensure full closure of purchase.
Furthermore, when paying Buyer’s Stamp Duty, there is a certain schedule to be followed, accompanied by a percentage value imposed. For example, your regular payment for your property is $180,000. For the first payment, the percentage value would be 1%. For the second, 2%. And then for all subsequent payments would be a percentage value of 3%, ensuring full compliance on the buyer’s part while also increasing the value’s property in terms of quality.
Seller’s Stamp Duty and How it Works
SSD is payable if you sell your residential property within 3 years of ownership. The SSD is calculated based on the value of your properties.
In recent times, the policies regarding SSD are a bit more relaxed compared to when it was first introduced and implemented. Depending on how long the property stays on the market, the value and the prices would decrease.
If the property is on hold for at least a year or two, the value would decrease to 8% from the standard value of 12%.
If the property’s been on hold for two or more years, the value would decrease to 4% from 8% that was originally decreased from the initial property value percentage.
In short, this policy ensures that sellers are driven to sell any property at their disposal to ensure the values stay constant and buyers comply for cooperation.
Additional Buyer’s Stamp Duty and How it Works
Additional Buyer’s Stamp Duty was introduced in 2011. Its aim is to moderate the demand of residential properties for local and foreign investors. It also aims to ensure that no matter what, prices imposed on residential properties remain affordable to anyone interested in purchasing or investing in the property.
Since its introduction, rates for ABSD have stabilised from the increase in 2013 to ensure good market demand and avert drastic price corrections.
Takeaway
Stamp Duties, though strict in principle and implementation, ensures that all citizens live in comfort while abiding with the laws of the land. Learn more about Buyer’s Stamp Duty for properties for sale in Singapore.
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