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Rental Unit Stamp Duty 101

Despite the on-going COVID-19 pandemic, the property rental market in Singapore remains robust with both locals and foreigners requiring short and long term rentals. Singapore is known for attracting foreign investments and therefore businesses will always be renting office space and foreign workers will be renting residential units.

Based on Ministry of Manpower (MOM) data, there were 189,700 Employment Pass and 188,800 S Pass issued in June 2020. That’s a lot of people requiring rental options.

With the easing of some travel restrictions, demand for rental will likely increase. Before you start renting a unit, there are stamp duties that you should be aware of. Today, we'll take a look at rental stamp duty and the amount of stamp duty payable.

According to the Inland Revenue Authority of Singapore (IRAS), stamp duty on lease is payable based on the contractual rental or the market rental, whichever is higher, at the Lease Duty rates.

Once you found a rental unit of your liking and have signed the Tenancy Agreement (TA), you are required to pay the first month rent and security deposit. Then you’ll need to pay the Stamp Duty. Stamp duty is always paid by the tenant unless it is negotiated that the landlord will pay. The only time you do not have to pay the Stamp Duty is if the Annual Average Rent is less than $1,000 which is highly unlikely in the Singapore property market.

How much to pay?

So how much Stamp Duty are you expected to pay? For lease period of less than 4 years, Stamp duty is calculated at 0.4% of the total rent for the lease period.

If the lease period is more than four years, it is calculated at 0.4% of four times of the Average Annual Rent (AAR) of the lease period.

When to pay?

According to the IRAS, you are required to stamp the TA before you sign it. However, if you have signed a document and stamped it within the following time frame, no penalty will be charged:

  1. Within 14 days after signing the document if it is signed in Singapore or

  2. Within 30 days after receiving* the document in Singapore if the document is signed overseas

As per the IRAS website, Stamp Duty has to be paid as shown in the assessment notice before the payment due date. You are required to pay the Stamp Duty before the payment due date even if you have filed an objection and are awaiting the outcome. If the assessment is subsequently revised, any excess payment will be refunded.

Late payment penalty

There will be a penalty of $10 or an amount equal to the duty payable, whichever is greater, imposed for late payments not exceeding 3 months. For late payments exceeding 3 months, a penalty of $25 or 4 times of the duty payable, whichever is greater, will be imposed.

How and where to pay

Stamp Duty can be paid using internet banking transfer or FAST (for DBS/ POSB accounts), AXS Kiosk, AXS Mobile, AXS Website, eNETS, and GIRO. Take note that there is no instalment payment plan for Stamp Duty as it must be paid in full.

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