Buying a second property in Singapore is a tough but exciting decision. However, there are many investment opportunities out there that can provide huge benefits to the next generation. Before you take such a big step of buying your second house, make sure you’re ready for it both financially and mentally – but still consider its advantages as well.
The situation of Singapore’s property market
The looming recession and falling property prices present an opportunity for those with plans to buy a second home in Singapore. Buying a second property thus requires careful consideration, but if done wisely it can be extremely profitable in the future.
A potential buyer of another residential unit should consider all factors including eligibility, affordability and intention before moving forward on their purchase plan.
Some useful tips to consider when owning a second property in Singapore?
1. Be sure to have enough cash for ABSD.
In Singapore, ABSD is a particular type of tax, levied in addition to the Buyer’s Stamp Duty (BSD) which property buyers have to pay when they buy a property. The ABSD rate varies based on two factors – firstly, it depends on whether or not you’re purchasing your home and secondly, if so then this will depend also upon how expensive that purchase price was compared with other homes sold at around about the same time as yours
ABSD stands for Additional Buyers’ Stamp Duty. It can be computed separately from BSD but usually isn’t because their calculations are similar enough that calculating one automatically calculates both types of duty without much fuss.
The government of Singapore has imposed a 12% Additional Buyer’s Stamp Duty (ABSD) on their citizens for any property purchase beyond the first.
If you’re a Singapore Permanent Resident, your first property is subject to the 5% ABSD tax. This percentage triples for any additional properties on top of that.
Foreigners meanwhile are subject to the ABSD of 20%, with some exceptions. For example, American citizens do not have this tax imposed upon them due to free trade agreements in place.
2. Get to know the eligibility requirements for second property ownership.
If you’re looking to buy a second home, find out first if it’s private or public. If the property is privately owned and not already in use for residential purposes (e.g., undeveloped land), then go ahead! But be sure that your existing housing unit isn’t government-owned before proceeding with any purchase of new property as there are certain criteria which need to be fulfilled by homeowners who own HDB flats, ECs, BTO flats or DBSS units.
HDB flats come with a 5-year Minimum Occupation Period (MOP). This means that you’d need to occupy the property for at least five years before even considering selling or renting it out. You will also have to fulfill this MOP if you’re purchasing your first home. On the other hand, private properties are not exempt from these requirements.
3. Be aware of other regulations pertinent to Singapore property ownership.
In the world of property ownership, Singapore has a unique law that restricts some people from owning both public and private properties. For example, only citizens will be able to buy an HDB (Housing Development Board) flat and own another property in the same country simultaneously; PRs must move out within 6 months after buying their second home privately.