Should Seller's Stamp Duty be replaced by capital gains tax?
SSD of 1 per cent for the first S$180,000, 2 per cent on the next S$180,000 and 3 per cent on the remainder was applicable to sale of homes with a holding period of under one year when SSD was first introduced in February 2010.
Today, SSD rates are much higher and the holding period before a seller can sell a home without attracting SSD is much longer.
The latest changes to SSD saw the holding period and rates increased. Effective from Jul 4, SSD rates are 16 per cent for a holding period of up to one year, 12 per cent for a holding period of more than one year and up to two years, 8 per cent for a holding period of over two years and up to three years, and 4 per cent for a holding period of over three years and up to four years. SSD is not payable where the holding period exceeds four years.
SSD is applied based on a home's transacted price or its market value, whichever is higher.
Perhaps it's not surprising that the SSD regime got tougher. In recent years, the number of private residential property transactions with short holding periods rose sharply, in particular the sub-sale of uncompleted units.
A NEWSLETTER FOR YOU
Tuesday, 12 pm Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Sign Up
Sign Up
Certainly, many people view buying a home as a long-term investment and those buying for owner-occupation may envisage holding on to the said home for well over four years.
Also, the need to hold a private home for over four years before selling it so as not to attract SSD is hardly onerous compared with a minimum occupation period (MOP) of five years or more for Housing and Development Board (HDB) flats. The MOP is the time period that an owner must physically reside in a flat.
However, new HDB flats are sold at subsidised prices unlike private homes and some HDB flat buyers receive housing grants.
Impact on housing mobility
The tighter SSD regime will adversely impact housing mobility and possibly affect some private homebuyers who buy a unit predominantly for living and not for investing.
Firstly, there are sound reasons why homeowners may want to sell a home within four years of purchase.
For example, a breakdown in a relationship between parties who jointly bought a private home or the need to raise funds to finance a family emergency, deal with a job loss or pursue a business venture could drive owners to sell a home within a fairly short holding period.
Being 'pushed' by the SSD regime to hold onto a home for longer than is desired may add undue stress to homeowners caught in the above circumstances.
Secondly, the SSD regime can sting particularly hard should an economic recession cause home prices to fall sharply.
In the above scenario, financial pressure may drive many owners, including buyers of new uncompleted condos, to sell their private homes at losses. And the losses will be exacerbated for owners, who are financially stretched but not bankrupt, by the need to pay SSD where homes are held for four years or less.
Currently, individuals who own residential properties need not pay SSD if they have been adjudged a bankrupt and are required to dispose of their homes as a result of bankruptcy.
Capital gains tax
Maybe, applying SSD to the sale of homes should be replaced by introducing capital gains tax on the sale of property whether residential or non-residential. Afterall, why drive housing speculation to other segments of the physical property market?
Currently, gains from selling property in Singapore are generally not taxable. However, gains from sale of property may be taxable if one is assessed to be trading in property.
Taxing the gains from selling a home can be fairer than applying SSD on homes sold within a holding period of four years or less regardless of whether the transaction was profitable.
Capital gains tax on property sales could be applied using higher rates for shorter holding periods and lower rates for longer holding periods. To emphasise the long-term nature of property investment, the tax can apply to properties that are held for say eight years or less.
Also, costs incurred by owners on building improvements could be taken into account when computing capital gains for tax purposes.
Progressive payment
Ultimately, in land scarce Singapore, applying a capital gains tax to sale of various types of physical property might be effective in curbing speculation and raising revenue.
While many people buy private homes here for owner occupation, some buyers may be driven solely by the aim of making a fairly quick buck.
Buying a choice uncompleted unit at a new condo's launch using the progressive payment scheme and selling the unit before it's fully completed and paid for could still work despite the tougher SSD regime.
Take the purchase of a S$2 million new uncompleted condo home. Assume the unit is sold at 15 per cent above the purchase price after three and a half years, ahead of obtaining the temporary occupation permit or certificate of statutory completion.
In the above case, the profit on the purchase price of S$300,000 can comfortably cover Buyer's Stamp Duty and SSD of S$161,600 as well as agent's selling commission and legal fees.
Moreover, having 40 per cent of the unit's purchase price still unpaid at the time of its disposal will enhance the seller's investment returns.
The government intervenes actively in the local private housing market. Rightly, buyers have to be financially prudent and locals buying homes for owner occupation enjoy preferential treatment.
Nonetheless, there will be investors, including relatively short-term ones, eyeing potentially lucrative financial returns from buying private homes.
Whether applying SSD or capital gains tax on sale of homes is fairer or more effective in managing housing demand is debatable.
Still, while tough measures will help keep speculators at bay, some speculative activity in private homes could persist should demand stay strong.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
20 hours ago
- Business Times
Should Seller's Stamp Duty be replaced by capital gains tax?
[SINGAPORE] Strong guardrails are in place to help ensure a stable housing market in Singapore. This includes levying seller's stamp duty (SSD) on transactions of homes which are sold within a specified holding period. SSD of 1 per cent for the first S$180,000, 2 per cent on the next S$180,000 and 3 per cent on the remainder was applicable to sale of homes with a holding period of under one year when SSD was first introduced in February 2010. Today, SSD rates are much higher and the holding period before a seller can sell a home without attracting SSD is much longer. The latest changes to SSD saw the holding period and rates increased. Effective from Jul 4, SSD rates are 16 per cent for a holding period of up to one year, 12 per cent for a holding period of more than one year and up to two years, 8 per cent for a holding period of over two years and up to three years, and 4 per cent for a holding period of over three years and up to four years. SSD is not payable where the holding period exceeds four years. SSD is applied based on a home's transacted price or its market value, whichever is higher. Perhaps it's not surprising that the SSD regime got tougher. In recent years, the number of private residential property transactions with short holding periods rose sharply, in particular the sub-sale of uncompleted units. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Certainly, many people view buying a home as a long-term investment and those buying for owner-occupation may envisage holding on to the said home for well over four years. Also, the need to hold a private home for over four years before selling it so as not to attract SSD is hardly onerous compared with a minimum occupation period (MOP) of five years or more for Housing and Development Board (HDB) flats. The MOP is the time period that an owner must physically reside in a flat. However, new HDB flats are sold at subsidised prices unlike private homes and some HDB flat buyers receive housing grants. Impact on housing mobility The tighter SSD regime will adversely impact housing mobility and possibly affect some private homebuyers who buy a unit predominantly for living and not for investing. Firstly, there are sound reasons why homeowners may want to sell a home within four years of purchase. For example, a breakdown in a relationship between parties who jointly bought a private home or the need to raise funds to finance a family emergency, deal with a job loss or pursue a business venture could drive owners to sell a home within a fairly short holding period. Being 'pushed' by the SSD regime to hold onto a home for longer than is desired may add undue stress to homeowners caught in the above circumstances. Secondly, the SSD regime can sting particularly hard should an economic recession cause home prices to fall sharply. In the above scenario, financial pressure may drive many owners, including buyers of new uncompleted condos, to sell their private homes at losses. And the losses will be exacerbated for owners, who are financially stretched but not bankrupt, by the need to pay SSD where homes are held for four years or less. Currently, individuals who own residential properties need not pay SSD if they have been adjudged a bankrupt and are required to dispose of their homes as a result of bankruptcy. Capital gains tax Maybe, applying SSD to the sale of homes should be replaced by introducing capital gains tax on the sale of property whether residential or non-residential. Afterall, why drive housing speculation to other segments of the physical property market? Currently, gains from selling property in Singapore are generally not taxable. However, gains from sale of property may be taxable if one is assessed to be trading in property. Taxing the gains from selling a home can be fairer than applying SSD on homes sold within a holding period of four years or less regardless of whether the transaction was profitable. Capital gains tax on property sales could be applied using higher rates for shorter holding periods and lower rates for longer holding periods. To emphasise the long-term nature of property investment, the tax can apply to properties that are held for say eight years or less. Also, costs incurred by owners on building improvements could be taken into account when computing capital gains for tax purposes. Progressive payment Ultimately, in land scarce Singapore, applying a capital gains tax to sale of various types of physical property might be effective in curbing speculation and raising revenue. While many people buy private homes here for owner occupation, some buyers may be driven solely by the aim of making a fairly quick buck. Buying a choice uncompleted unit at a new condo's launch using the progressive payment scheme and selling the unit before it's fully completed and paid for could still work despite the tougher SSD regime. Take the purchase of a S$2 million new uncompleted condo home. Assume the unit is sold at 15 per cent above the purchase price after three and a half years, ahead of obtaining the temporary occupation permit or certificate of statutory completion. In the above case, the profit on the purchase price of S$300,000 can comfortably cover Buyer's Stamp Duty and SSD of S$161,600 as well as agent's selling commission and legal fees. Moreover, having 40 per cent of the unit's purchase price still unpaid at the time of its disposal will enhance the seller's investment returns. The government intervenes actively in the local private housing market. Rightly, buyers have to be financially prudent and locals buying homes for owner occupation enjoy preferential treatment. Nonetheless, there will be investors, including relatively short-term ones, eyeing potentially lucrative financial returns from buying private homes. Whether applying SSD or capital gains tax on sale of homes is fairer or more effective in managing housing demand is debatable. Still, while tough measures will help keep speculators at bay, some speculative activity in private homes could persist should demand stay strong.
Business Times
2 days ago
- Business Times
Singapore's first home launch since new curbs sells over 90%
[SINGAPORE] Singapore's first mass-market private residential project launched since new curbs were introduced saw the development almost sold out as homes were sold at lower-than-usual prices. The LyndenWoods development sold 324 units on Saturday (Jul 12), the first day it started to accept bookings, CapitaLand Development said in a statement the same evening. That's about 94 per cent of the 343 units to be built at a business park in the city's south. The launch came over a week after the introduction of surprise measures targeting speculators in the property market. Owners must now hold their homes for at least four years if they want to avoid paying a seller's tax, from three previously, while those who still choose to do so face higher levies than before. CapitaLand Development – part of CapitaLand Group that's owned by Singapore state investor Temasek Holdings – said LyndenWoods homes were sold at an average price of S$2,450 per square foot to mainly professionals, couples and families who were attracted by its long-term investment potential. That's lower than median rates for similar units across Singapore and the district. Another project about a mile away has sold less than half of its 358 units after its launch earlier this year. The early performance may validate policymakers' concerns about a trend of flipping properties for a quick profit, which had driven a renewed jump in home prices and risked affecting affordability in one of the world's most expensive residential markets. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Private home prices grew for a third straight quarter in the three months ended June, although the pace slowed to 0.5 per cent, preliminary data show. Not all projects have outperformed. High-end homes in the central business district have struggled since seperate curbs in 2023 raised levies on foreigner purchases, and the projects have been less popular among local buyers due to relatively higher pricing and a lack of amenities. One such luxury project boasting over 680 units, W Residences Marina View, was also slated to accept bookings on Saturday. IOI Properties Group, its Malaysian developer, has not publicly released data on its performance. More projects are lined up for sale in coming weeks, and may give further clues of how buyers are digesting the measures. The opening sales weekend for private projects usually sees the bulk of transactions, and is closely watched for an indication of market sentiment. BLOOMBERG
Independent Singapore
3 days ago
- Independent Singapore
Singapore HDB flats dubbed most 'attainable' homes among APAC's capital cities, but netizen says 'must compare until it's affordable'
Photo: Depositphotos/tang90246 Featured News Property Singapore News SINGAPORE: Singapore's Housing & Development Board (HDB) flats have been named the 'most attainable homes' among Asia Pacific's (APAC's) capital cities, according to the 2025 Urban Land Institute (ULI) Asia Pacific Home Attainability Index. While it sounds like good news, many locals questioned what 'attainable' really means in Singapore, with one netizen remarking, 'Must compare to other countries until it's affordable.' Singapore Business Review reported that ULI defined 'attainable' housing as homes costing no more than five times the median annual household income, which is consistently met by HDB flats. Notably, among 51 urban housing markets surveyed, only seven were found to offer attainable home ownership, and Singapore's HDB system was the only one in a national capital. Despite rising urban costs across the region, the report found that the city-state's public housing system, which houses 80% of the population, remains within reach for median-income Singaporean households, compared to those in Hong Kong, Tokyo, or Sydney. See also Speaker of Parliament Tan Chuan-Jin's family adopts stray kitten Still, some Singaporeans online said the housing prices in the city-state continue to rise. One said HDB flats are 'public housing, yet prices are so high.' Another wrote, 'Our HDB flats are getting so costly. I worry for the future generations. They will be slaves to the flat for the rest of their lives.' One commenter also pointed to the shrinking sizes of homes in the city-state, saying, 'Look at the new flat sizes. It is not liveable at all. Look up at the windows of the nice new flats. So many clothes [are] hanging there because [there is] no proper laundry space!' The ULI report explained, pointing to Singapore's HDB system, that 'Operating a similar scheme is more difficult in countries where the government has less control of freehold land.' While many cities in APAC face rising prices, limited land, and speculative demand, Singapore's centrally planned and subsidised housing has helped keep home ownership within reach for citizens, although access remains limited for non-citizens due to the 60% Additional Buyer's Stamp Duty on foreign buyers. /TISG Read also: 'Why Indonesia?': Singaporean couple share 5 reasons why they moved after their HDB MOP Featured image by Depositphotos (for illustration purposes only) () => { const trigger = if ('IntersectionObserver' in window && trigger) { const observer = new IntersectionObserver((entries, observer) => { => { if ( { lazyLoader(); // You should define lazyLoader() elsewhere or inline here // Run once } }); }, { rootMargin: '800px', threshold: 0.1 }); } else { // Fallback setTimeout(lazyLoader, 3000); } });
