Singapore Property Gains Tax Changes Dropped

by Mary Swire, Tax-News.com, Hong Kong

27 August 2009

Following a public consultation exercise, the Ministry of Finance (MoF) in Singapore has decided not to change the current income tax treatment regarding individuals who sell their properties.

Under the current framework, it confirmed that the Inland Revenue Authority of Singapore (IRAS) considers the facts and circumstances of each case to determine if the individual owner concerned should be subject to income tax on the property disposal gains. In practice, IRAS has assessed gains from property disposals to be taxable income for only a small number of individuals – typically those who regularly transact in property.

Under the proposal that was put up for public consultation, individuals who sold their properties were told that they would be certain that the gains they made would not be subject to income tax if they had not sold any other properties in the preceding four years. Under all other circumstances, whether the gains from a property sale were subject to income tax would have continued to depend on the facts and circumstances of the case.

The MoF said that the proposed tax change was in response to public feedback over the years that there should be certainty of non-taxation for individuals who did not frequently buy and sell properties. In particular, it was emphasised, the proposed change involved no tightening of the current income tax treatment for individuals who sell their properties.

The vast majority of comments received by the MoF did not support the proposal. Feedback on the proposed change suggested that it would distort property decisions, for example, from the purchase of a number of smaller to one larger property. It was also said that the proposed change could create inadvertent uncertainty for individuals who sell more than one property within any four years, even though there was no change to the current income tax treatment for such cases.

In addition, there were many other possible factors, besides the frequency of property disposal, which could merit granting certainty of non-taxation. Catering for all of those factors, the MoF said would have made the income tax treatment of property disposals too complex.

The MoF has therefore decided that it is, on balance, best to retain the current framework of income tax treatment for individuals who sell their properties. Following this decision, IRAS will continue to consider the facts and circumstances of each disposal to determine if the individual owner concerned should be subject to income tax on the property disposal gains.

It was reasserted that the facts and circumstances that IRAS considers in determining whether an individual is deriving income from selling his property include the situation leading to the sale, how long the individual has held the property, and how frequently he has been selling properties. As in the past, IRAS does not expect that many individuals will be assessed as having to pay income tax on gains from selling their property.

A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report15.asp