Buying Private Property in Singapore as a Foreigner or Through a Company
If you are a foreigner considering buying property in Singapore, one of the first questions is whether you can buy residential property at all.
For most private condominiums and apartments, the answer is generally yes. The more important question, however, is often how the property should be purchased and held.
Should you buy in your personal name? Should the property be purchased through a Singapore company? Does buying through a company reduce stamp duty? What if you want to buy jointly with a Singapore Citizen or PR? And what happens if you want to buy landed property?
Can a foreigner buy private property in Singapore?
A foreigner can generally purchase a private condominium or apartment in Singapore without approval under the Residential Property Act.
Landed residential property is different. A foreign person who wants to purchase a landed residential property in Singapore generally needs approval under the Residential Property Act. Applications are assessed on a case-by-case basis, and the applicable requirements depend on the property and the applicant’s circumstances.
The Residential Property Act and the ABSD rules are separate regimes. Being permitted to purchase a property does not mean that the same tax treatment will apply as it would to a Singapore Citizen or PR.
For most foreign buyers considering a private condominium, the more immediate issue is usually not whether they can buy, but how much the purchase will cost.
How much ABSD does a foreigner pay?
Foreigners purchasing residential property in Singapore are generally subject to Additional Buyer’s Stamp Duty (ABSD) at 60%, on top of Buyer’s Stamp Duty (BSD).
ABSD and BSD are calculated on the higher of the purchase price or market value of the property.
For example, on a private residential property purchased for $2,000,000:
- ABSD at 60%: $1,200,000
- BSD: $69,600
- Total stamp duty: $1,269,600
This example assumes the purchase price and market value are both $2 million and that no remission or other relief applies.
What if I buy jointly with a Singapore Citizen or PR?
Foreign buyers sometimes consider purchasing a property jointly with a Singapore Citizen or Singapore Permanent Resident, particularly where the buyer is married to a Singaporean or PR.
Having one joint buyer with a lower ABSD rate does not automatically mean that the entire purchase will be taxed at that lower rate. Where joint buyers have different profiles, the highest applicable rate generally applies to the whole purchase. Specific remissions exist for certain married couples, subject to conditions.
Joint purchasers should therefore consider the ABSD consequences before deciding how the property will be held. Where the property is intended to be a family home, the ownership arrangement may also have consequences beyond the initial purchase.
Can I buy through a company?
Yes, a company can acquire residential property in Singapore.
But buying through a company does not generally provide a way to avoid ABSD. For residential property purchases, an entity is currently subject to 65% ABSD. This is higher than the 60% rate generally applicable to a foreign individual.
On a $2 million residential property:
| Buyer | ABSD rate | ABSD on $2 million |
|---|---|---|
| Singapore Citizen buying first property | 0% | $0 |
| Singapore PR buying first property | 5% | $100,000 |
| Foreigner | 60% | $1,200,000 |
| Entity/company | 65% | $1,300,000 |
These figures are for illustration only and do not include BSD or other transaction costs.
If the purpose of using a company is simply to reduce ABSD on the purchase of a residential property, the company structure does not achieve that objective in the ordinary case.
IRAS also distinguishes housing developers from other entities for ABSD purposes, and specific remission rules may apply where the relevant conditions are met.
So why would someone buy through a company?
A company structure may be considered for reasons that go beyond the upfront stamp duty. Depending on the circumstances, a buyer may be thinking about:
- how the property will be used;
- whether it forms part of a wider business or investment structure;
- ownership and succession considerations;
- financing arrangements;
- future disposal;
- whether the property is genuinely residential or has a commercial component; and
- whether a specific statutory relief or remission may apply.
The company should therefore not be viewed simply as a vehicle for avoiding ABSD. For an entity acquiring residential property without an intention to carry out housing development, IRAS states that the applicable ABSD rate is 65%.
The proposed structure should be considered before the purchase is committed.
What if I buy personally first and transfer the property to my company later?
A later transfer of the property to a company is not simply an administrative change of ownership. It can itself have stamp duty consequences, and the treatment depends on the circumstances of the transfer and the ownership structure.
Buying personally first and moving the property into a company later should therefore not be assumed to be a way around the ABSD rules.
There are also specific rules on property-holding entities. In qualifying circumstances, transfers of interests in an entity that holds residential property can attract Additional Conveyance Duties (ACD).
The cost and consequences should be considered before the original purchase is made.
What if I want to buy commercial property instead?
Commercial property is subject to a different stamp duty framework from residential property, and the treatment depends on the nature and classification of the property.
This is relevant where a buyer is considering an office, shop, industrial property or a property with both residential and commercial components.
A buyer should establish the property’s permitted use and classification before assuming that the residential ABSD rules apply. For mixed-use or unusual properties, the transaction should be assessed on the specific property rather than its marketing description.
What if I need financing?
The amount that can be borrowed, the lender’s requirements, the buyer’s income and residency circumstances, and the property’s characteristics all affect the financing available. This matters particularly for a high-value purchase, where the ABSD itself may be a substantial upfront cash requirement.
Before committing to a property, work out the overall funding requirement, including:
- purchase price;
- BSD and ABSD;
- legal and transaction costs;
- required cash contribution; and
- the expected loan amount and repayment obligations.
The financing position should be established before an OTP is negotiated.
What if the company wants to buy landed property?
Landed property raises a separate issue from ABSD.
The Residential Property Act regulates the acquisition of restricted residential property by foreign persons and foreign entities. Restricted residential property includes landed residential property such as terrace houses, semi-detached houses and bungalows, as well as certain other categories of property.
Where a company is involved, the position depends on how the company is constituted, including its directors and shareholders. A company incorporated in Singapore is not automatically treated as local for every purpose under the Residential Property Act, and a company may require approval or a Clearance Certificate from SLA before it can acquire restricted residential property.
For a company purchasing landed property, you should therefore consider both:
- the stamp duty consequences of the purchase; and
- whether approval or a Clearance Certificate is required under the Residential Property Act.
These are separate questions.
Are there exceptions for certain foreigners?
Yes. Under Singapore’s Free Trade Agreements, certain nationals of the United States, Iceland, Liechtenstein, Norway and Switzerland may receive the same ABSD treatment as Singapore Citizens, subject to the applicable conditions.
Your nationality may therefore affect the ABSD rate that applies to your purchase.
What if I become a Singapore Citizen later?
Your status at the time of purchase determines the stamp duty on that purchase. Becoming a Singapore Citizen later does not reverse the stamp duty that applied when an earlier property was purchased.
If you expect your status to change, this is relevant to the timing and ownership structure of a purchase.
What should I decide before making an offer?
If you are a foreigner or are considering purchasing property through a company, consider:
- What type of property are you buying?
- Are you buying personally or through an entity?
- Are you buying alone or jointly with another person?
- Is the property residential, commercial or mixed-use?
- Is SLA approval or a Clearance Certificate required?
- What is the applicable ABSD rate?
- Does any exemption, remission or special rule apply?
- How will the purchase be financed?
- How much cash will be required upfront?
- Who will ultimately own the property?
- How long do you expect to hold it?
- What happens if you later want to sell or transfer the property?
- Could your residency or citizenship status change?
For a foreign buyer, the difference between a 60% ABSD rate and a 65% entity rate can amount to hundreds of thousands of dollars on a high-value property. The ownership structure, financing and transaction costs should therefore be considered before you negotiate or sign an Option to Purchase (OTP).
If you are a foreign buyer or business owner considering a purchase, we can help you work through the property, ownership and transaction considerations before you make an offer.
This note provides general information only and does not constitute legal, tax or financial advice. Stamp duty rates, property rules and other requirements may change. Readers should verify the applicable rules with the relevant authorities and their professional advisers before proceeding with a transaction.
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