Seller's Stamp Duty: Things to know before selling your property within three years

Are you thinking of selling your property? If you bought the house less than three years ago, you’d have to pay additional taxes, known as the Seller’s Stamp Duty (SSD)!

Here’s what you need to know before selling your property within three years.

What is stamp duty?

Stamp duty is the tax on documents relating to a property, stock, or shares, payable to the Inland Revenue Authority of Singapore (IRAS).

Almost all residential property transactions are subject to stamp duty, whether buying, selling, or renting property.

The more common property stamp duty is the Buyer’s Stamp Duty (BSD), Additional Buyer’s Stamp Duty (ABSD), Seller’s Stamp Duty (SSD), and Lease Duty.

What is Seller’s Stamp Duty?

Seller’s Stamp Duty is akin to a cooling measure to prevent house-flipping and control property prices. First introduced in 2010, its terms have been revised several times across the years.

SSD is the tax payable when you sell residential properties and lands within their minimum holding period. The minimum holding period before no SSD is payable is three years.

This means that if you sell your property less than three years after your date of purchase, you must pay the SSD.

SSD Rates

The cost of the SSD can be pretty hefty, to the extent that people have made losses from it.

Depending on your holding period, it can go up to 12 per cent of either the selling price of your property or its market value, whichever is higher.

Suppose you’re only selling a portion of the residential property. In that case, the payable SSD will still be based on the selling price or market valuation of the partial interest, whichever is higher.

Here are the SSD rates for property purchased on or after March 11, 2017:

Take note: If your flat becomes an en-bloc within the holding period, you still need to pay the SSD, even if you voted against the en-bloc. That’s something to consider before buying a house with en bloc potential!

Calculating the holding period

The holding period depends on the date of purchase or acquisition and the date of sale or disposal.

The date of purchase or acquisition of residential property usually refers to one of the following:

1. Date of Acceptance of the Option to Purchase (OTP), excluding an OTP that is subject to the execution or signing of the Sale and Purchase Agreement
2. Date of Sale and Purchase Agreement
3. Date of Agreement for Lease (for new HDB flats)
4. Date of Transfer when options (a) to (c) are inapplicable.

The date of sale or disposal usually refers to one of the following:

1. Date of Acceptance of the OTP by the buyer to the seller’s offer to sell, excluding an OTP that is subject to the execution or signing of the Sale and Purchase Agreement
2. Date of Sale and Purchase Agreement
3. Date of Transfer when options (a) and (b) are inapplicable.

For example, if you bought your property on Nov 12, 2020 and sold it on Dec 12, 2021 for $1 million, the holding period is more than a year and less than two years. This means that your SSD rate is eight per cent.

You will need to pay an SSD amount of $1 million x eight per cent = $80,000.

When will you be exempted from SSD?

Not all properties need to pay the SSD even if sold within the minimum holding period.

Here are some scenarios where sellers are exempted from SSD:

1. Residential property owners when the Government acquires their properties under the Land Acquisitions Act.
2. Individuals who have been declared bankrupt and are required to dispose of their residential properties.
3. Foreigners when they have to sell their residential properties under the Residential Property Act.
4. HDB flat owners who acquired their flats on or after Aug 30, 2010 have these flats identified for Selective Enbloc Redevelopment Scheme (SERS), but who sell their apartments before HDB claims them.
5. HDB flat sellers or transferors return their flats to HDB because of re-possession by HDB or under SERS.
6. A person who owns an HDB flat and inherits another HDB flat, and is required by HDB to dispose of one of the flats.
7. HDB requires a person who owns a non-HDB flat and inherits an HDB flat to dispose of the inherited HDB flat.
8. A person who owns an HDB flat marries a person who holds another HDB flat, and HDB requires the couple to dispose of one of their HDB flats.

Other hidden costs

It’s best to wait for at least three years before selling your property. At the very least, you won’t have to pay the SSD.

Don’t forget that there are other hidden costs when selling your property! If you took out a home loan to purchase a flat, you need to pay it off. Legal fees, mortgage penalty, property tax, and property agent commission fees are also included.

If you’re selling your first subsidised HDB flat, you also need to pay an HDB resale levy, which can go up to S$55,000.

And if you used your CPF to purchase the flat you’re selling, you must pay back the amount taken from your CPF Ordinary Account (OA) and its accrued interest, and the amount from CPF grants and its accrued interests.

ALSO READ: What you need to know about stamp duty for rental units in Singapore