From a property tax perspective, there are many things buyers of vacant land or development sites should check or do before and after purchasing the vacant land or development sites.
Information for Buyers of Vacant Land or Development Sites 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.
The Inland Revenue Authority of Singapore (IRAS) has na Integrated Legal Requisition System (InteReq), which is a subscription-based service for law firms and legal professionals to conduct searches on property, and request for Statement of Accounts (SOA).
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.
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 Vacant Land or Development Sites 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 you about the updated record of ownership. If there is any outstanding tax buyers of vacant land or development sites must arrange for payment to be made.
Property tax for buyers of vacant land or development sites is calculated by multiplying the Annual Value (AV) of your land with the prevailing property tax rate. The AV is assessed at 5% of the estimated freehold land value. The current tax rate is 10%. For land purchased in an en-bloc sale the annual value of the en-bloc property is determined on the basis of the aggregated annual value of all the building units during the period of deferment. The deferment will continue for one year from the date the criteria are met, and will be reviewed yearly thereafter.
For new application, the deferment shall commence from the date of transfer or the date of vacation of the en-bloc property, whichever is applicable, but not earlier than 12 months prior to the minimum criteria being met, and in any case not before 1 Jan 2008.
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 vacant land or development sites can apply for Property Tax Remission for Land Under Development for an Owner-Occupied House if they satisfy the conditions. From January 2014 onwards, a land parcel under construction for a single house intended for owner-occupation can be taxed at owner-occupier tax rates for the period under construction, for a maximum period of two years.
To be eligible for the remission, buyers of vacant land or development sites should ensure that the land is not be occupied and that no rent or fee is charged or received for the occupation or use of the land or any part thereof.
The owner or spouse should also not be enjoying the owner-occupier tax rates on another property during the remission period and the replacement house is owner-occupied for at least one year following the Temporary Occupation Permit (TOP) date or the Certificate of Statutory Completion (CSC) from the Building Authority. The Annual Value (AV) of the land parcel should also be less than $190,000.