Understanding the Basics of Buyer Stamp Duty and Other Fees

Are you buying a residential property in Singapore for the first time? Houses in Singapore are
expensive. And, you have to pay other fees in addition to the asking price. What are the Extra Fees?

1. Option to Purchase (OTP) or Booking Fees

You pay the booking fees to the seller, for them to secure the house. The booking fees are about 5% to
10% of the agreed upon price. You may pay two types of booking fees; the option Fee,” paid first, and
it’s about 1% of the value of the home.

After paying the option fee, the seller grants you the right to buy the property. They have to deliver the
Sale & Purchase Agreement and title deed of the house to your lawyer for review within 14 days after
the day you pay the option fee.

Exercising the Option to Purchase (OTP)

You will have 3 weeks to exercise the option-to-purchase. Once you decide to complete the purchase,
you pay the option exercise fee (which is the remaining percentage of the total booking fee).

Example 1:

Price of the residential property: $100,000.

Booking fees: 10%

Option fee: 1% x $100,000 = $1,000

Option exercise fee: 9% x $10,000 = $9,000

To exercise the option you:

Sign the copies of the sales and purchase agreement

Return the copies to the property developer
Pay the down payment

2. Down Payment

You pay the down payment when using both HBD loans or bank loans. Banks require prospective
owners to pay 20% of the purchase price. For HBD loans, you pay 10% in cash.

Example 2:

Let us assume you are using a bank loan to purchase a property valued at $100,000, and you have paid
an option fee of $10,000. The down payment becomes:

$20,000 -$10,000 = $10,000.

If you paid booking fees of 10%, you will now pay a down payment of 10%.

3. The Buyer Stamp Duty

On signing the Option to Purchase (OTP) documents, you enter into a valid sale contract with the
developer or seller. The government taxes legal documents before it can recognize them. The tax is
known as the stamp duty.

For properties in Singapore, the stamp duty is applicable to the following documents:

a). Tenancy and Lease Agreement Documents – Required when renting property
b). Transfer Documents – Needed to legalize the transfer of the property from the seller to
purchaser. The various duties under this category are:
- Buyers Stamp Duty (BSD)
- Additional Buyers Stamp Duty (ABSD)
- Seller’s Stamp Duty (SSD)
c). Mortgage Documents – Required when obtaining loans to finance the purchase of residential
properties. The standard amount charged is 0.4% of the loan amount.

Let’s now focus on the transfer documents:

Buyers Stamp Duty (BSD)

It’s applicable for documents signed in the presence of your lawyer, which together constitute the Sale
& Purchase Agreement. We can define the Buyer Stamp Duty as:

“The tax charged by the government, when you sign documents authorizing the transfer of the property
from the seller to you.”

Laws Governing the BSD

The Inland Revenue Authority of Singapore (IRAS), requires all buyers to stamp the documents before
signing them. Still, you can obtain the legal stamp after signing the sale and agreement documents
based on the following criteria:

- For documents signed within Singapore, you have 14 days to pay the BSD.
- For documents signed overseas, you have 30 days to pay the BSD.

What if I’m late?

The IRAS imposes a penalty on property buyers who don’t meet the deadlines (14 days within
Singapore & 30 days for documents signed overseas). The penalty for late payment may be – 4 times –
the original stamp duty amount. The IRAS also imposes the penalty on documents not stamped
sufficiently.

How much will I Pay as the BSD?

You calculate the Buyer Stamp Duty based on the purchase price of the house or its market value –
whichever is higher.
Let’s look at an example:

A condominium has a market value of $500,000. If you buy it for $480,000, you will use the market
value ($500,000) to calculate the BSD.

Now:

Suppose the seller promised to offer you a furniture voucher worth $10,000 after you authorize the
documents. Is it possible to deduct this amount as a discount?

No!

You can’t deduce this amount from the purchase price or market price when computing the stamp duty.
Only the Sale & Purchase Agreement is liable to Stamp Duty. Other documents are not used when
determining the Buyer Stamp Duty.

What if I buy multiple properties?

Remember that, the stamp duty proves to the government that the contract took place.

If you are buying one property, you enter into one contract. If you are going to sign multiple documents
for different properties, you pay the BSD on each document. But, when a single contract represents all
the properties, you pay the BSD based on the total purchase price.

Let’s Calculate the Stamp Duty

Applicable Rates

First $180,000 1%
Next $180,000 2%
Remaining Amount 3%

Note: We use Market Value or Purchase or Buying Price(whichever is more).

Example:

Your dream house has a market value of $450,000, but you purchase it for $500,000.

i. Which amount will we use?

ANSWER: Purchase price $500,000

ii. What is the Buyer Stamp Duty (BSD)?

The 1st $180,000×1% = $1,800

The 2nd $180,000×2% = $3,600

Remaining Amount ($500,000 - $360,000) x 3% = $4,200

##The stamp duty amount = $1800 + $3600 + $42000 = $9,600

Shorter Computation:

$500,000×3% = $15,000 - ($5,400, constant) = $9,600

—You can use this formula when dealing with amounts more than $360,000.

Additional Buyers Stamp Duty (ABSD)

Type of Buyer ABSD Rates effective from

2013, Jan 12
Singapore Citizen (SC) purchasing first residential property N/A

SC purchasing second residential property 7%

SC buying third property Onward 10%

Singapore Permanent Residents (SPR) purchasing first 5%

residential property

10%
SPR purchasing second, third, and subsequent properties

Foreigners and entities like unincorporated associations 15%

purchasing any residential asset (1st, 2nd, 3rd etc.)

Explanation of Table

On the table, there are two columns: “The type of Buyer” and “ABSD Rates.” How do these apply?

Examples

“I’m a Foreigner”

John, a foreigner, wants to purchase his first property worth $500,000. How much stamp duty does he
pay? Because he his not a Singapore citizen, he will pay the BSD and the ABSD rates:

Applicable BSD: 3% x $500,000 - ($5,400) = $9,600

Applicable ABSD: 15% x $500,000 = $75,000

Total stamp duty becomes =$84,600

“I’m a Singapore Citizen Married to a foreigner?

The IRAS offers ABSD reductions (rate reductions or full refunds of the ABSD) to married couples
where one partner, a Singapore Citizen (SC), is married to a Singapore Permanent Resident (SPR).

Note that, you calculate the stamp duty based on the person with the highest profile. In this example
(foreigner married to SC), the stamp duty paid is going to be the BSD rate + 15%, which means a
higher fee.

“I ‘m an SC married to an SPR. What is the stamp duty on our first property together?

In this case, the IRAS may grant you an ABSD remission. However, you must satisfy certain
requirements or scenarios specified by the IRAS. Check the scenarios marked with a “#” in tables 2 to
4 on the following external link:

https://www.iras.gov.sg/irashome/uploadedFiles/IRASHome/Other_Taxes/
Stamp_Duty_for_Property/Claiming_Refunds_Remissions_Reliefs/Remissions/ABSD Rates and
Refund for Married Couples.pdf

If you satisfy the eligibility criteria, you will not pay the BSD and ABSD upon stamping. Instead, your
lawyer applies for the ABSD remission via the e-Stamping Portal.

If successful, the government awards you the remission certificate, which can mean using a reduced
rate or forgoing the ABSD rate altogether.

“I’m a Singapore Citizen Married to an SPR. What is the stamp duty for our second property?

Couples (SC and SPR) purchasing their second residential property jointly also qualify for ABSD
refunds. However, they first have to fulfill some conditions. The most important qualification is that the
Sale and Property Agreement certificate must bear the couple’s names. More requirements when
dealing with second properties include:

i. The married couple should own only one residential property during the period they purchase the
second property.
ii. ABSD has to be paid on the second residential property, before requesting refunds.

iii. The couple must be married at the time of applying for the ABSD and no change of ownership
should have occurred.

v. The couple must not have acquired any other residential properties within Singapore before
purchasing the second residential property.

vi. The application of the refund has to be within 6 months after the date they sold the first property.

Where to Apply for Stamp Duty

There are three ways of stamping your documents:

- Service Bureaus
- e-Stamping website (https://estamping.iras.gov.sg)
- e-Terminals at IRAS Surf Centre

Other Fees Paid by Homeowners

4. Valuation Fees:

Buyers who intend to use their CPF savings to finance the purchase of HBD flats or private properties
have to pay the valuation fee. Professional appraisers undertake the valuation, and they charge between
S$140 to S$200. The cost depends on the type of flat you are purchasing.

5. Legal Fees

You pay your lawyer for legal services such as registering the title deed, and verifying the authenticity
and correctness of the documents sent by the seller. Buyers of HBD flats can use the services of HBD
solicitors or appoint private lawyers.

The HBD website details the particulars of the solicitor fees. You can pay legal fees in cash or with
CPF savings. Note that, private legal fees may be more than HBD solicitor fees. It is advisable to ask
the amount the lawyer charges.

6. Insurance

For HDB loans, it is compulsory for borrowers to obtain fire insurance. It covers any structural
damage caused by fire to the original fixtures or installations. However, the fire insurance does not
cover any damage to the home's contents such as furniture.

Most covers range from S$1.50 (one-room flats) to about S$7.50 (executive flats etc.) Owners of
private flats still require fire insurance, but the details of the cover and premiums vary.

6. Administrative Fees

You will incur these fees when purchasing HDB flats (fixed at S$10) and private properties. The
amount you pay will cover the costs of preparing the paperwork and other office tasks. Additional
administrative costs may occur depending on the particulars of the situation.

6. Buyer Agent Fees

If you engage a buying agent to acquire HBD flats or private properties on your behalf, they will
charge a commission. But, in most cases, it is the seller who pays the commission, which is shared by
the seller and buyer agent. The commission is negotiable, and traditionally it starts at 1%.

7. Resale Application Fee

For resale properties, the buyer and seller have to pay an application fee that is about S$40 to S$80.
Resale application fees also depend on the type of flat.