From a property tax perspective, there are many things buyers of other types of properties should check or do before and after purchasing offices, shops, factories and other properties.
Information for Buyers of Other Types of Properties Before the Transfer of Property
Make a legal requisition on the property
Once the property is transferred to you, you will be liable for any outstanding property tax including arrears that should have been paid by the previous owner. Thus, it is important for your lawyer to make a legal requisition to check on any outstanding property tax. For newly constructed properties, Inland Revenue Authority of Singapore (IRAS) will bill you for the property tax that starts from the date of temporary occupation permit (TOP) within one year of TOP.
Apportion property tax between you and the seller
If there is an outstanding tax amount, your HDB officer or lawyer will assist you to settle the outstanding amount with the seller. Your HDB officer or lawyer will also apportion the current year tax between the seller and yourself. IRAS does not apportion property tax liabilities between the parties.
File a Notice of Transfer to IRAS
The seller’s lawyer will file a Notice of Transfer to IRAS within one month of the sale or property transfer. For correspondence and payment, IRAS communicates with the owner who is listed first in the Notice of Transfer filed by the seller’s lawyer. If there is a preference among owners on who IRAS should correspond with, please inform your lawyer. Your lawyer will then liaise with the seller’s lawyer to ensure the Notice of Transfer is filed correctly.
The following information is required for filing Notice of Transfer:
- Sale and Purchase Agreement;
- Identification numbers of the transferors/ transferees*;
- Nationalities and Dates of Birth for non-Singapore Citizens; and
- Names (according to the identification documents) of non-Singapore Citizens.
Generally, your lawyer performs these tasks as part of conveyancing or the legal process of transferring ownership of property. But buyers of other types of properties should check with their lawyer to find out more about the status of the tasks. Where there is more than one owner, all correspondence relating to property tax matters will be addressed to the first name stated in the Notice of Transfer. Lawyers should confirm with the new owners on the name of the addresses before filing.
Information for Buyers of Other Types of Properties After the Transfer of Property
Once the Notice of Transfer has been processed by IRAS, the record of ownership will be updated for property tax purposes. Buyers of other types of properties however have to remember to update their address as IRAS sends the property tax bill or notice to the address listed on your identity card; or the corporate owner’s registered office address listed in the Accounting and Corporate Regulatory Authority (ACRA) records. To receive all your correspondence promptly, ensure that your address is updated.
IRAS will issue an Acknowledgement Notice to inform buyers of other types of properties about the updated record of ownership. If there is any outstanding tax for your property, arrange for payment to be made.
You may calculate the annual property tax payable, multiply the Annual Value (AV) of the property with the set of Property Tax Rates that applies to you. The current tax rate is 10% per year regardless of whether the property is let, vacant or for own use. When there is more than one owner, all the owners are collectively responsible for paying property tax. Payment of property tax must be made within 1 month from the date of Acknowledgement Notice.
Buyers of other types of properties should also be mindful of other taxes relating to property.
When you buy any property, you need to pay Stamp Duty within 14 days of the date of Contract/Agreement. In most instances, your lawyer acting on your behalf in purchasing the property will arrange for payment of Stamp Duty.
Good and Services Tax (GST)
You are required to pay GST on purchases of non-residential properties if the seller is GST-registered. Find out more on GST chargeability and GST input tax claims on properties.
Income Tax from Rental
If you partially or fully rent out your property, your rental income is subject to income tax. Find out more on Rent from property. More information for corporate owners.
By: Phoenix Lee/Contributor iCompareLoan
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