You will be able to explain when Seller's Stamp Duty applies to a private property sale.
One of Hakim's teammates bought a condo, and fourteen months later his company moved him to Hong Kong. Renting it out was possible, but he wanted the cash for a home there, so he sold. The sale went through at a decent price. Then his lawyer sent the bill for Seller's Stamp Duty, a sum he had never heard of, and it took most of what he thought he had made.
Buyer's Stamp Duty and ABSD are paid when you buy. Seller's Stamp Duty is the one you pay when you sell, and only if you sell soon.
Seller's Stamp Duty, or SSD, is a tax on selling residential property within a holding period after you bought it. It exists to discourage people from buying homes to sell quickly for a profit, which pushes prices up for everyone else. The seller pays it, and like the other stamp duties it goes to IRAS.
IRAS charges it on the selling price, or on the market value at the time of sale if that is higher. Notice what is missing from that sentence: profit. Because the duty is worked out on the whole sale price, a seller who makes a loss still pays it.
SSD has a holding period, set by the government. Sell within it and you pay. Sell after it and you don't. Within the period, the rate is highest if you sell in the first year and falls in steps each year after that.
To see the size of it, take rates invented for this example: 12% if you sell in the first year, 8% in the second, 4% in the third, and nothing after. These are not the IRAS rates, and the real holding period has been changed more than once, most recently with cooling measures.
Hakim's teammate sold a condo for S$1.25 million in his second year. At the invented 8%, his SSD would be S$100,000. Had he waited until the period ended, it would have been nothing. And if he had sold at a loss, at S$1.15 million, he would still have owed 8% of that, S$92,000.
That is why the date you might need to sell belongs in your plans before you buy.
SSD applies to residential property in general, but in practice HDB owners rarely meet it. An HDB flat can't be sold on the open market until its minimum occupation period ends, and the MOP has been longer than the SSD holding period. By the time you are allowed to sell the flat, you are already outside the holding period.
That relationship depends on two sets of rules that are both revised from time to time. Check the current SSD holding period on the IRAS website and the MOP for your flat on the HDB website, and confirm that the second is still the longer.
For private property and for executive condos once they can be sold, SSD is a real risk. A condo bought as a first home can be caught just as easily as one bought as an investment, because SSD looks only at dates.
Few people buy a home planning to sell it within a couple of years. SSD catches people whose plans change: an overseas posting, a divorce, a job loss that makes the instalment too heavy, a family member who needs care elsewhere, or an upgrade that comes earlier than planned. Lesson 1.4, Rent longer or buy now: compare them honestly, made the case for setting a stay length before you buy. SSD is one of the costs that makes a short stay expensive.
If a forced sale within the holding period is a real possibility, you have a few choices. You can rent the home out until the period ends, if the rules on renting allow it, which lesson 7.3 covers. You can delay the purchase until your plans are clearer. Or you can count SSD as a cost of that scenario and decide whether you can live with it.
In the comparison from lesson 1.5, Compare two homes over ten years, you marked the first year each home could be sold under its MOP. Add the end of the SSD holding period to the same sheet for any private home or EC, and use whichever date is later.
Farah and Hakim's Bedok flat would be outside SSD by the end of its MOP, so their sheet didn't change. But for the condo they might buy in ten years' time, they added a note: no sale before the end of the SSD holding period without counting the duty first.
Then run the scenario nobody wants. The activity below asks you to look up the current holding period and SSD rates on IRAS and work out what you would owe if you had to sell your planned home in year two.
Write the holding period and SSD rate that would apply if you had to sell your planned home in year two.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).