Inherited a Property in Singapore? What Should You Do Before Selling or Keeping It?
Inheriting a property often comes at a time when there are other family and financial matters to deal with.
The immediate question is often whether to sell the property. But depending on the property, the beneficiaries, your existing property ownership and your future plans, keeping or selling it can have very different consequences.
This note covers the main property considerations after inheriting a residential property in Singapore.
Can I sell an inherited property?
The first question is whether you have the legal authority to deal with the property.
Where a property forms part of an estate, the relevant grant of probate or letters of administration and the ownership position need to be considered before a sale can proceed.
If there are multiple beneficiaries, their respective interests and the arrangements for the sale should also be clarified.
The property may therefore be capable of being sold, but the practical steps depend on how the estate and property ownership are structured.
Do I have to pay ABSD when I inherit a property?
Inheritance itself is generally not treated in the same way as a purchase for ABSD purposes.
However, inheriting a residential property can affect your position when you subsequently buy another residential property. The inherited property may count towards the number of residential properties you own, which can affect the ABSD payable on a future purchase. The same applies if you are considering buying jointly with a spouse or another person.
IRAS has specific rules on how inherited properties and inherited shares in a property are counted, so the position should be checked before you buy.
The timing of any sale, the ownership structure and any proposed purchase should therefore be considered together.
Should I sell the property or keep it?
It depends on the property and the beneficiaries.
Some beneficiaries may prefer to sell because they do not intend to live in the property, while others may consider keeping it as a home or investment.
If the inherited property is an HDB flat, HDB’s eligibility rules determine whether you may keep it. If you already own another property, you may be required to sell one of them within a set period.
Before deciding, consider:
- the property’s current market value;
- its remaining lease and condition;
- rental potential, if relevant;
- outstanding mortgage or other liabilities;
- the number of beneficiaries and their respective interests;
- the costs of maintaining the property; and
- whether keeping it affects your future plans to buy another property.
The decision should be based on the circumstances of the property and the beneficiaries, rather than simply on whether property prices are expected to rise.
What if there are several beneficiaries?
Where a property is inherited by more than one person, the decision may not be straightforward.
One beneficiary may want to keep the property while another may prefer to sell. There may also be differences in how the proceeds should ultimately be distributed.
If one beneficiary intends to take over the property from the others, the legal and stamp duty implications should be considered before any arrangement is made.
The ownership and intended arrangement should be established first. An inherited property cannot always be sold or transferred in the same way as an ordinary purchase.
Does the property’s age or lease matter?
It can.
An inherited property may be an older HDB flat, condominium or landed property. Its age, remaining lease, condition, location and recent transaction prices can all affect its marketability and value.
For an older property, it may be useful to look at recent comparable transactions rather than relying solely on asking prices or historical purchase prices.
Selling immediately is not necessarily the best course. The property should be assessed on its current circumstances.
What should I work out before deciding?
Before deciding whether to sell or keep an inherited property, consider:
- Who legally owns the property?
- Are there multiple beneficiaries?
- Is there an outstanding mortgage or other liability?
- What is the property’s current market value?
- What are comparable properties actually transacting at?
- What would it cost to maintain or sell the property?
- Would keeping it affect a future property purchase?
- If selling, how should the sale and proceeds be handled between the beneficiaries?
The appropriate decision depends on the property, the ownership position, the beneficiaries and what each person intends to do next.
If you have inherited a property and are considering whether to sell, keep or otherwise deal with it, we can help you work through the property and transaction considerations before you make a decision.
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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