Contract Stamp Duty in Singapore: What You Need to Know
In Singapore, when it comes to buying or selling property, contract stamp duty is an important factor that needs to be considered. It is a tax levied on documents such as sales and purchase agreements, lease agreements, and tenancy agreements that are related to the transfer of property. In this article, we will cover everything you need to know about contract stamp duty in Singapore.
What is Contract Stamp Duty?
Contract stamp duty is a tax imposed by the Singapore government on documents that are executed in Singapore, or relate to property located in Singapore. The tax is paid to the Inland Revenue Authority of Singapore (IRAS) and is typically based on the value of the property transferred or the consideration paid for the property.
Who is Liable to Pay Contract Stamp Duty?
The party liable to pay contract stamp duty varies depending on the type of document being stamped. For example:
– Sales and purchase agreements: The buyer is typically responsible for paying the stamp duty.
– Lease agreements for immovable property: The landlord is responsible for paying the stamp duty.
– Tenancy agreements for residential properties: The tenant is responsible for paying the stamp duty.
The stamp duty is usually paid within 14 days of the execution of the document.
How is Contract Stamp Duty Calculated?
The stamp duty payable is based on the purchase price (for sales and purchase agreements) or the total rent payable (for lease and tenancy agreements). The amount of stamp duty payable can be calculated using the following formula:
– Sales and purchase agreements: 3% on the first $180,000, 4% on the next $180,000, and 12% on the remaining amount.
– Lease agreements: 0.4% of the total rent payable for the entire lease period.
– Tenancy agreements: 0.4% of the total rent payable for the entire lease period, up to a maximum of 4 years.
For example, if you are buying a property for $1 million, the stamp duty payable will be:
– 3% on the first $180,000 = $5,400
– 4% on the next $180,000 = $7,200
– 12% on the remaining $640,000 = $76,800
– Total stamp duty payable = $89,400
What Happens if You Don`t Pay Contract Stamp Duty?
If you fail to pay the required stamp duty, the document will not be admissible as evidence in court. In addition, you may be subject to penalties and fines imposed by IRAS.
Contract stamp duty is an important consideration when buying or selling property in Singapore. It is important to understand the rules and regulations around stamp duty and ensure that you pay the required amount within the given timeframe. If you have any questions or concerns about contract stamp duty, it is best to consult a professional for advice.