Changes In Seller’s Stamp Duty, TDSR and Share Transfers
In a press release by the Ministry of Finance on the 10th March 2017. The government has announced modifications for some of the cooling measures implemented earlier. These include calibrated adjustments to Seller’s Stamp Duty (SSD), Total Debt Servicing Ratio (TDSR) as well the transfer of shares in companies whose primary assets are residential property in Singapore.
Changes In Seller’s Stamp Duty
The Seller’s Stamp Duty implemented on the 14th of January 2011 was a means to deter speculation. Purchasers who bought on or after this date meant that they have to hold onto their property for a said time frame. Otherwise, they would be liable to pay a stamp duty. Based on a progressive model, the SSD is lower when the holding period is longer. The new SSD however, will see a reduction in both the quantum as well as the holding period.
Seller’s Stamp Duty From 14th January 2011 to 10th March 2017
| Holding Period | SSD Liable (% Based On Actual Price Or Market Value, Whichever Higher) |
|---|---|
| Up to 1 Year | 16% |
| More than 1 year and up to 2 years | 12% |
| More than 2 years and up to 3 years | 8% |
| More than 3 years and up to 4 years | 4% |
| More than 4 years | No SSD payable |
Seller’s Stamp Duty From 11th March 2017 Onwards
| HOLDING PERIOD | SSD LIABLE (% BASED ON ACTUAL PRICE OR MARKET VALUE, WHICHEVER HIGHER) |
|---|---|
| Up to 1 year | 12% |
| More than 1 year and up to 2 years | 8% |
| More than 2 years and up to 3 years | 4% |
| More than 3 years | No SSD payable |
Changes In TSDR Framework For Mortgage Equity Withdrawl Loans
Not be confused with the current TDSR Framework. This shift applies to only mortgage equity withdrawal loans and not new property purchases. For example, Mr Tan is holding on to an entirely paid property of $1 mil. Under this new framework, Mr Tan can cash out and withdraw 50% of the asset price, effectively taking a loan amount of $500,000. Before this, Mr Tan is required to substantiate this loan amount with a debt not exceeding 60% of this monthly income. The new change will allow Mr Tan to cash out despite having no income. This move is expected to benefit retirees who are asset rich. However, in spite of these changes, banks do have their internal checks, and loan quantum and terms may ultimately vary.
Stamp Duties Payable For Transfer Of Equity Interest In Entities Whose Main Assets Are Residential Properties in Singapore
Previously, to avoid paying hefty Additional Buyer’s Stamp Duty or the extension charges of the Qualifying Certificate Scheme. Developers utilise the transfer of shares to change ownership and ultimately find a loophole to avoid these taxes. To plug this loophole, the government will treat these transfer of shares no different than a property transaction. This change does not affect individual retail shareowners of the listed company but rather place emphasis on entities that are considered Property Holding Entity (PHE).
More details about this press release are available at Ministry of Finance Singapore.
