Singapore Raises Property Taxes for Foreign Buyers to Curb Rising Housing Prices

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Singapore, one of Indonesia’s neighboring countries, has recently announced a tax hike on personal property purchases, including an increase in stamp duty rates for foreigners to 60%. This new rate came into effect on Thursday, April 27th.

According to a statement by the Ministry of Finance, the Ministry of National Development, and the Monetary Authority of Singapore, the additional buyer’s stamp duty (ABSD) for Singapore citizens and permanent residents will also face an increase, but it will be much smaller and only applicable to the purchase of second and subsequent properties.

The ABSD on the purchase of second and subsequent homes by Singaporeans will increase to 20% from 17% and 30% from 25%, respectively. Meanwhile, for permanent residents, it will increase by 5 points each to 30% and 35% for the purchase of second and subsequent properties.

As reported by Reuters, the Singaporean government stated that property prices are showing signs of a new acceleration amid strong demand.

“If left unchecked, prices could run ahead of economic fundamentals, with the risk of sustained price increases relative to income,” said the authorities.

Singapore last increased stamp duty in December 2021 when the property market was said to be on the rise despite the economic impact of Covid-19. The government stated that based on last year’s data, it is estimated that the changes in stamp duty will affect around 10% of residential property transactions.

However, the increase in Singapore’s property tax has surprised and been referred to as a freezing move for foreigners. Vera Liu, a Singaporean property agent, panicked after the new property tax rate caused two of her purchase deals to fall through.

Liu’s foreign buyers withdrew from the purchase of a luxury condominium worth SGD 10 million or USD 7.50 million along Orchard Road shopping belt. Meanwhile, another interested buyer who had transferred funds to Singapore also postponed their purchase.

“The door is now closed (for foreign buyers). I panicked and called my buyers at midnight, this is crazy, the adjustment is very high. It could mean several million dollars more in stamp duty for some buyers,” Liu said.

The increase in stamp duty is one of the toughest tightening measures in the property market in a long time and comes after a surge in foreign buyers returning to Singapore’s property market in recent years.

Singapore’s National Development Minister, Desmond Lee, said that without early preventive action, both local and foreign investment would grow, adding pressure to Singaporeans who want to buy property.