Since the introduction of higher Additional Buyer’s Stamp Duty (ABSD) rates in Singapore, attitudes toward property ownership and investment evaluation have changed significantly. During the 1990s, Singaporean real estate investors effectively navigated the market by leveraging rental income from one property to fund the purchase of another. How things have changed over the years.
In practice, the ABSD has become a considerable obstacle that prompts even the most discerning investors to reevaluate their strategies. This concise tutorial explains how to buy 2nd property in Singapore without ABSD.
Under free trade agreements, depending on your nationality, you may or may not be eligible for ABSD remission. When they buy residential properties in Singapore, nationals or permanent residents of countries such as the United States, Norway, Iceland, Liechtenstein, and Iceland pay the same ABSD residential rates as Singaporeans.
The “National Treatment” obligation under the Singapore-European Free Trade Agreement (EFTA) serves as the basis for this privilege. In accordance with the relevant free trade agreements, individuals who are citizens or permanent residents of these countries are eligible for ABSD remission.
People who want to buy a second commercial property in Singapore can do so without paying the Additional Buyer’s Stamp Duty (ABSD). It is straightforward to see that ABSD rates do not apply to commercial properties. Because they are exempt from additional stamp duties, they are an attractive option for investors seeking to expand their property portfolios without incurring additional costs.
Compared to the typical 2% to 3% range observed in the residential sector, commercial properties generally offer higher rental yields, averaging approximately 5%. Property in commercial investments may offer financial benefits due to the potential for future development.
It is crucial to have a comprehensive understanding of the distinctive characteristics and related risks of commercial properties. The cash investment needed to buy a commercial property is higher than it is for residential properties, for starters.
To exacerbate the situation, commercial properties require a full cash down payment, whereas residential properties may allow the use of CPF. GST, currently 8%, is, without a doubt, applicable to commercial properties. It is consistently required to settle the GST amount in cash.
Investing in commercial property can be highly lucrative, but it requires comprehensive research and a deep understanding of Singapore’s commercial real estate market, which differs significantly from the residential market.
