The Singapore Budget 2023 by Deputy Prime Minister and Finance Minister Lawrence Wong included an increase in buyer stamp duty rates on higher-value residential and non-residential properties. There is hence a higher stamp duty rates for properties.
For residential properties, any portion of the value above $1.5 million and up to $3 million will now be taxed at 5%. Anything over $3 million will be taxed at 6%, a 2% increase from the current rate of 4%. This will affect 15% of residential properties.
This 2% increase in buyer stamp duty rates on higher-value residential and non-residential properties, in combination with other wealth taxes, cooling measures, and higher financing costs for both residential and commercial properties, could lead to a slowing down in transaction volumes across both sectors in the near future.
We should not ignore the potential impact on upcoming good new private condo launches such as Blossoms by the Park, Terra Hill and the Botany.
Higher stamp duty rates for properties : Examples of impact of increase in BSD
For example, a residential property with a value of S$2 million will attract a buyer stamp duty of S$69,600, up 7 per cent from the prevailing S$64,600.
A residential property selling for S$3 million would attract S$119,600 in the updated tax, up 14.3 per cent from S$104,600.
A home that cost S$10 million will now have a BSD of S$539,600, a 40.3 per cent increase over the S$384,600 currently.
Non-Residential Properties are impacted too
For non-residential properties, any portion of the value above $1 million and up to $1.5 million will be taxed at 4%, while those valued over $1.5 million will be taxed at 5%. This change affects 60% of non-residential properties. All the new rates will come into effect from February 15th.
It is thought that the new BSD regime – with a 4% tax on commercial property prices up to S$1.5 million and a 5% tax for anything above that – won’t drastically change demand for commercial assets. However, it could affect transactions costing over S$1 billion and collective sale markets, as the higher tax rate could further widen the gap between buyers and sellers.
Nearly 60% of Singapore’s non-residential properties will be affected by the change, with price expectations between buyers and sellers likely to be further stretched.
This move is likely to have a greater impact in the higher-value transactions and in collective sale markets. It’s estimated that the new tax rate could widen the price expectations gap between buyers and sellers.
