IRAS Tax Guidelines for Selling or Renting Property

Do you want to sell or rent your property? To ensure everything is covered, learn what needs to be taken care of before and after the sale or renting out of your property. Find out what documentation you require or what taxes or fees need to be paid.

Steps for Renting Out a Property

Do you want to rent out your home or part of your home? Learn about the different factors that contribute to rental income. Find out what taxes you need to pay, the documents needed, or what monies could be due to you.

1. Letting IRAS Know When the Lease Started

All types of lease documents need to be e-stamped. You don’t have to notify IRAS of the rental as this happens automatically.

Your tenant will also have to get the rental agreement e-stamped, this includes renting of rooms. You can request your tenant to give you a stamp certificate copy to make sure your agreement has an e-stamp. If this is not adhered to, it will attract a fine of up to S$5,000. You also may get charged an interest on the tax.

2. Renting Your Entire Property

When you live in your own home, you will get a tax concession in the form of owner-occupier tax rates. However, if you choose to rent your property, these will be withdrawn. It is withdrawn from the date you rent your property and you will need to pay a higher rate of property tax.

3. Changing Back to Owner-Occupier Tax Rates When Lease Ends

Once your tenants have ended the contract and moved out, you will have to apply once again for owner-occupier tax rates. This will only apply if you, the property owner, move back into the property.

At the end of a tenancy, the concession does not get applied automatically. You will have to apply for this on the myTax Portal. If you decide not to live in the home after your tenants move out, you will continue to pay the higher residential tax rates.

4. Paying Taxes for Rental Income

You may need to pay tax on income you receive as rent. Rental income is the total amount received as rent, plus any related payments received when renting out your home. This could be in the form of maintenance payments, rental on furniture and fittings, etc.

You have to pay tax on the rental income, minus any permitted expenses incurred during the time your home is rented out.

Steps Before Selling Your Property

Getting ready to sell your property? Have a look at these guidelines, which will ensure you leave no stone unturned where your taxes are concerned.

Pay outstanding taxes and stop your GIRO payments. You may even have money due to you in the form of tax refunds.

1. Paying Pending Property Taxes

You have to pay your property tax by January. You will have to make this payment annually and in advance. So, before selling your property, make sure your complete tax amount is paid no later than 31 January.

Have you not paid tax for the full year or do you pay by GIRO? Before your property is sold, you should check how much tax you owe and make the payments. You shouldn’t stop GIRO payments until all pending tax is paid.

2. Apportioning Property Tax Between Buyer and Seller

The buyer of your property may have to compensate you for any property tax already paid by you. As IRAS does not handle apportionment, you will need to ask your lawyer or HDB officer to help you divide the tax. Any reimbursements you seek from your buyer can also be handled by your lawyer.

3. Stopping GIRO Payments

Before you stop GIRO payments for tax, you need to make sure all pending property tax is paid. GIRO payments are stopped automatically once you notify IRAS of the sale of your property.

If you want to stop GIRO payments before the sale is complete, you can either contact your bank or let IRAS know. Once GIRO is terminated, any pending tax needs to be paid immediately to prevent a penalty of 5% on the pending tax.

If you are cancelling GIRO payments for the next month, you need to let IRAS know a week prior to the end of the current month. Banks will continue to deduct GIRO payments if no instruction is received from you.

4. Claiming Relief on Property Tax

If you want to benefit from owner-occupier tax rates, you need to apply for it. Your application needs to be submitted a minimum of 6 weeks prior to the property being transferred.

Once your property is transferred to the buyer, IRAS won’t entertain your application. If your application is successful, you need to claim any excess payments no later than 5 years from the time it was paid.

5. Informing IRAS of the Sale of Property

Your lawyer usually informs IRAS of the sale or transfer of your property through a Notice of Transfer. In such a case, you do not have to inform IRAS separately. If you owned an HDB flat, the HDB officers will let IRAS know your property has been transferred.

Are you still receiving valuation notices or bills from the IRAS? If you still receive these a month after the transfer of your property, check if your lawyer has filed a Notice of Transfer. For more information on late filing of a Notice of Transfer or if a Notice of Transfer has not been submitted, click here.

6. Paying Seller’s Stamp Duty

If you sell your property in 4 years from the time you get it, you may be liable for Seller’s Stamp Duty or SSD. This needs to be paid no later than 14 days from the contract or agreement date. Depending on your circumstances, you may or may not need to pay SSD. Your lawyer will be able to confirm this.

7. Capital Gains on Property Sale

Gains from the sale of your property are known as capital gains. As an individual who is selling your home, you will not be taxed for capital gains.

Do you buy and sell property with the intention to make profit? If you do, you are liable to pay tax on the profit earned from such trade.

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