Investing in Singapore Real Estate for Foreigners

Written by Posted On Thursday, 22 February 2018 03:36

Why should you invest Singapore Real Estate?

Singapore’s transformation from a malarial swamp to one of the affluent countries in the world was nothing short of extraordinary. A strategic location along the Strait of Malacca, pro-business government, openness and transparency to foreign investment, along with a bit of resourcefulness have all helped the country leap forward over the past few decades.

For investors, this leads to both strengths and weaknesses in Singapore’s property market. A strong rule of law, stable currency and political environment, high efficiency, and English as the official language means that foreign real estate buyers are not likely to encounter problems – at least not any which won’t go away easily. Buying real estate is far easier in Singapore for foreigners. Developers usually maintain high standards and the transfer process couldn’t be much easier.

Singapore’s lack of space and strategic location will drive property prices higher in the future, betting on a lack of supply. Indeed, a good argument can be made that there’s still room for growth. Comparable city-states such as Hong Kong, Lichtenstein, and Monaco all have more expensive real estate markets than Singapore.

Can Foreigners Invest in Singapore Real Estate?

Yes, in general, foreigners can buy commercial and industrial properties and residential properties like new launch condominiums, except for landed residences.

How Much are Property Taxes does Foreign Owners have to Pay?

Taxes in Singapore are payable when buying a property. In addition, an annual property tax is also due. Both of these taxes are significantly higher for foreigners than for Singaporeans and permanent residents.

The tax when buying real estate is called the Additional Buyer’s Stamp Duty (ABSD) and is payable on the property’s purchase price. Singapore citizens buying their first property don’t pay ABSD. Singaporeans buying a second home need to pay 7%. This increases to 10% for any subsequent purchase.

ABSD is a bit stricter for permanent residents. PRs need to pay 5% on their first property and 10% on any subsequent one. However, foreigners must pay an even higher 15% on any purchase of real estate in Singapore.

Under the respective FTAs, Nationals or Permanent Residents of the following countries will be accorded the same Stamp Duty treatment as Singapore Citizens:
Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland
Nationals of the United States of America

Singapore’s annual property tax is payable at a progressive rate based on its annual rental value. A chart is shown below, but foreigners must pay an additional 10% on each rate. Furthermore, an extra 4% on each rate is payable for owner-occupied properties while a 10% is due on rental units.

Taxes on rental income in Singapore is a flat 20% for non-residents. For residents, this tax is around 15%. Insurance, repairs, renovations, and property taxes can all be used as deductions which can help lower this rate significantly.

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