Breakdown of Costs Needed to Buy Singapore Property
If you want to buy property in Singapore, know that owning a home here comes with financial obligations you need to carefully consider before making the big step.
Kick off the process by reviewing your current financial status and looking at your existing obligations, loans, and monthly income.
While the purchase price of a new home may be tempting, do keep keep in mind that it’s just one part of the equation. At the end of the deal, you will realise that investing in a house means that more costs will add up.
So, it is important that you plan your finances based on these costs before proceeding to buy your new home. Here’s a breakdown of all the costs you will need to buy a house in Singapore.
1) Option to Purchase
To secure the property you wish to purchase, the buyer has to pay the Option to Purchase fee. The Option to Purchase is a right or option given by the seller of a property – who can be an individual or a developer – to an intending purchaser to buy the property.
This is a contractual agreement that bounds the seller and the buyer. It gives the buyer a 14-day exclusivity period to think about the property, time during which, the seller is not allowed to offer the unit to other buyers.
The fee is normally 1% of the property’s agreed price. Note that the Option to Purchase fee is non-refundable and will be forfeited once the buyer decides to terminate the transaction.
2) Offer to Purchase
If you wish to buy property in Singapore, do consider you have to pay the Offer-to-Purchase fee. Some sellers can bypass the Option to Purchase by presenting buyers with a binding offer directly, known as the Offer to Purchase. This document will be prepared by the solicitor or agent and will state the completion date, price and other conditions.
The Offer-to-Purchase is normally 5% or 10% of the agreed purchase price. For those who have paid the Option to Purchase fee, the 1% exclusivity payment will be automatically deducted from the total down payment.
The downpayment is the sum that needs to be paid in cash. Downpayment may range from 10-20% depending on the developer or seller. Additionally, the Option to Purchase and Offer to Purchase fees are deducted from the total downpayment.
4) Buyer’s Stamp Duty (BSD)
The Stamp Duty is a tax on documents relating to the purchase of a property and it is required by the government. Paying the Stamp Duty is important because in case of disagreements with the purchase of the property, only documents with paid Stamp Duty are considered admissible in the court.
1st $180,000 = 1%
2nd $180,000 = 2%
Remaining = 3%
5) Additional Buyer’s Stamp Duty (ABSD)
The Additional Buyer’s Stamp Duty or ABSD is another tax that needs to be paid when purchasing property in Singapore. The fee is paid by the buyer on top of the Buyer’s Stamp Duty or BSD.
When multiple buyers of different profiles are jointly purchasing a property, the higher ABSD rate will apply on the purchase price/value of the property. If a foreigner and a Singaporean jointly buy a property worth of $1,000,000 with an equal share, the ABSD rate of 15% will apply to the S$1,000,000, and $150,000 of ABSD is payable.
Married couples made up of Singaporean and Singapore Permanent Resident or Singaporean and Foreigner who are buying a condo in Singapore are eligible to apply for remission of ABSD.
Also, nationals and Permanent Residents of Switzerland, Liechtenstein, Norway, Iceland, and nationals of United States of America, are accorded the same treatment as Singaporeans.
Rates and computation at a glance
|Profile of the Buyer||BSD Rates||ABSD Rates||ABSD Rates|
|Singapore Citizens (SC)1 buying first residential property||1% on first $180,000 2% on next $180,000
3% for the remainder
|SC1 buying second residential property||N/A||7%|
|SC1 buying third and subsequent residential property||3%||10%|
|Singapore Permanent Residents (SPR)1 buying first residential property||N/A||5%|
|SPR1 buying second and subsequent residential property||3%||10%|
|Foreigners (FR) and entities2 buying any residential property||10%||15%|
1 Whether owned wholly, partially or jointly with others.
2 An Entity means a person who is not an individual. It includes the following:
- An unincorporated association
- A trustee for a collective investment scheme when acting in that capacity
- A trustee-manager for a business trust when acting in that capacity
- The partners of the partnership whether or not any of them is an individual, where the property conveyed, transferred or assigned is to be held as partnership property
3 BSD and ABSD are to be rounded down to the nearest dollar.
*Do note that all government taxes are subject to change.
6) Stamp Duty for Mortgage Documents
A mortgage is a document where the interest in property is transferred from the borrower to the lender to secure the payment or repayment of money.
To secure the mortgage documents, a tax rate of 0.4% needs to be paid to IRAS. The total amount is maximum $500 and you can use cash or your CPF savings to make the payment.
7) Legal Fees
There are also some fees that need to be paid to a lawyer in order to carry out the necessary background checks on the property. The costs are around S$2,500-S$3,000 when using a lawyer appointed by the bank. Private lawyers’ fees may vary. Legal fees can be paid with CPF savings or in cash.
8) Valuation Fees
Before the bank you have appointed releases the fund to finance your property purchase, it will request for a valuation of the property to qualify the loan. The fee varies between the type and value of property purchased and usually costs between S$200 to S$500.
Also published on Medium.