10 Things You Must Know Before Buying a House in Singapore as an Expat
Deciding to buy a house in Singapore as an expat is a significant financial decision, which comes with numerous considerations, laws, and regulations that can seem like a labyrinth to the uninitiated.
This guide aims to shed light on these aspects and make your property acquisition journey in Singapore as smooth as possible.
1. Understand the Property Ownership Rules for Foreigners
Singapore’s rules surrounding foreign property ownership are multifaceted. While foreigners are permitted to own property, there are certain restrictions. A key point is that foreigners are generally not allowed to buy landed properties (e.g., bungalows, terrace houses). However, exceptions are available via an application to the Singapore Land Authority.
Tip: For a more hassle-free purchase, foreigners can buy condominiums without requiring any special approval.
2. Can Expats Buy HDB Flats?
HDB (Housing Development Board) flats are public housing units primarily catered to Singapore’s citizenry. As a foreigner or an expat, you are not eligible to purchase these directly from HDB.
However, Permanent Residents (PR) in a family nucleus can buy resale HDB flats. Some expats may be eligible to buy an HDB flat under specific circumstances, such as if they are married to a Singapore citizen or a Singapore permanent resident. In such cases, they may be able to apply for the flat under the Non-Citizen Spouse Scheme.
It’s important to note that eligibility rules and regulations can change over time, so it’s advisable to consult with the Housing and Development Board or a real estate professional for the most up-to-date information on the eligibility of expats to buy HDB flats in Singapore.
3. The Path from Property Ownership to PR Status
Is it possible to buy a house in Singapore and get PR status? The answer isn’t straightforward.
While owning property might add to your credentials, it’s not a guarantee for PR status. The process remains subject to the government’s evaluation criteria, which considers various factors like employment, contribution to society, and family ties in Singapore.
Owning a property in Singapore can potentially enhance your PR application by demonstrating your commitment to the country and your ability to contribute to the local economy. Owning a property may also provide stability and a stronger connection to Singapore, which can be favorable when applying for PR status.
However, it’s important to understand that the PR application process is competitive, and various other factors are taken into consideration by the Singapore government. These factors include your employment history, income level, educational qualifications, family ties, and contributions to the community.
4. Be Aware of the Additional Buyer's Stamp Duty (ABSD)
Expats and foreign investors should be aware of the ABSD – a significant cost that comes with buying property in Singapore. It’s an extra tax levied on top of the standard Buyer’s Stamp Duty. The ABSD rate for foreigners is currently 20% of the property’s value.
5. Tax Implications of Buying A House in Singapore
It’s crucial to factor in ongoing costs such as property tax when considering your budget. For example, non-owner-occupied residential properties in Singapore are taxed between 10% and 20% of the property’s annual value.
As an Australian expat buying a house in Singapore, here are the key tax implications to consider:
- Additional Buyer’s Stamp Duty (ABSD): You may be subject to a 20% ABSD on the purchase price as a foreigner.
- Goods and Services Tax (GST): GST does not apply to residential property purchases in Singapore.
- Rental Income Tax: Rental income from the property will be subject to Singaporean income tax based on your tax residency status and total income earned in Singapore.
- Capital Gains Tax: Singapore does not impose capital gains tax on the sale of residential properties.
- Double Taxation Agreements (DTAs): Singapore has a DTA with Australia to prevent double taxation. Consult a tax advisor to understand the specific implications under this agreement.
- Australian Tax Obligations: Consider your Australian tax obligations as well, as Australian tax residents are generally required to report worldwide income to the ATO.
Consult with our tax advisor for personalized guidance and up-to-date information.
6. Decoding Real Estate Jargon
When you embark on your property buying journey, you’re likely to encounter various industry-specific terms. Familiarize yourself with these terms to make your property purchasing experience seamless.
Here are some common real estate jargon:
- Appraisal: Evaluation of a property’s value.
- Closing Costs: Fees and expenses during property purchase/sale.
- Equity: Difference between property value and loan balance.
- Homeowners Association (HOA): Manages common areas in a community.
- Listing: Property available for sale or rent.
- Mortgage: Loan for property purchase with the property as collateral.
- Pre-approval: Lender’s assessment of maximum loan amount.
- Title: Legal ownership of a property.
- Under Contract: Agreement between buyer and seller before closing.
- Walk-through: Final inspection by buyer before closing.
7. Securing a Property Loan
Foreigners can secure a loan for buying a property in Singapore, but the Loan-to-Value ratio is generally capped at 75% for the first housing loan.
8. Engage a Solicitor and Property Agent
Working with experienced professionals can save you time and unnecessary complications. They can help you navigate the legalities, conduct price negotiations, and ultimately ensure a smooth transaction.
9. The Property Purchase Process
From exercising the Option to Purchase to the completion of the sale, the property purchase process in Singapore involves multiple steps. Be sure to understand this journey for a smooth and trouble-free purchase.
10. Changes to Look Out for in 2023
Stay up-to-date with new rules for buying property in Singapore, as changes in regulations can impact your buying decision significantly.
Now that you have a primer on buying a house in Singapore as an expat, it’s time to make your move confidently. Take these factors into account, prepare thoroughly, and you’ll be well-equipped to navigate Singapore’s property landscape.
Ready to take the plunge into Singapore’s real estate market? Consult with Odin Tax’s experienced tax advisors today to proactively prepare for the tax implications of buying a home in Singapore.
Yes, US citizens, like other foreigners, can buy property in Singapore, although they’re subject to restrictions on certain types of property.
Foreigners need to pay Additional Buyer’s Stamp Duty (ABSD) of 20% of the property’s value. This is on top of the existing Buyer’s Stamp Duty (BSD).
Foreigners can generally purchase condominium units in Singapore. However, certain executive condominiums (ECs) have restrictions during the initial 10-year period after construction.
Generally, foreigners are not permitted to purchase landed property in Singapore. However, exceptions can be made, subject to approval from the Singapore Land Authority.
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