Government raises seller’s stamp duty to 16%,

Government raises seller’s stamp duty to 16%,
January 15, 2011
The government has announced a new and stronger set of demand-side cooling measures, the third in less than a year.

The seller’s stamp duty for private homes will rise up to 16 percent from as high as 3 percent previously, while tighter mortgage restrictions will be implemented.

Analysts said the killer move is a sharp increase in the seller’s stamp duty to 16 percent, 12 percent, 8 percent and 4 percent, respectively, for properties purchased on or after 14 January 2011 and are sold in the first, second, third and fourth year after acquisition.

Owners selling apartments and houses less than three years after acquisition previously had to pay a seller’s stamp duty of only up to 3 percent.

The government also further cut the loan-to-value (LTV) limit on housing loans for both corporate and individual buyers.

Analysts believe the higher seller’s stamp duty will eliminate most speculators’ gain and shut them out of Singapore’s real estate market.

“For those buyers who intend to flip their properties within one or two years, the increased seller’s stamp duty erases their potential gains,” said Chua Hak Bin, an economist at Merrill Lynch. “So this measure is pretty targeted and will take away a big chunk of these potential investors.”

However, many analysts described the unexpected sharp increase in the seller’s stamp duty as harsh. Aside from impeding short- and medium-term investors, it could also affect genuine owner-occupiers seeking to change homes.

Ku Swee Yong, Chief Executive of International Property Advisor, said a staggered-down capital gains tax, which could possibly be applied only on capital gains from property, might have been more advisable, sparing those who sell properties at a loss.

“The government’s intention of forcing people to treat real estate as a long-term investment is admirable,” said Mr. Ku. “But this (the higher seller’s stamp duty) will force people to hold, including some genuine cases where there might be a real need to sell off a property.”


Info Courtesy - Property Guru