Property stamp duty collection leaps to S$6.8b

by Albert02

Property stamp duty collection leaps to S$6.8b

Property stamp duty collection leaps to S$6.8b. A RED-HOT property market fueled a 73.6 percent increase in stamp duties collected in Singapore’s fiscal year ending March 2022, despite a year-over-year decline in the first three months of 2022.

Stamp duty receipts for FY21, which ran from April 2021 to March 2022, was S$6.76 billion, up from S$3.9 billion in FY20. Based on data from the Accountant-Department, General’s published online at the Singapore Department of Statistics, it is also 61.1 percent greater than the S$4.2 billion in FY19, prior to the commencement of the epidemic.

According to Lee Sze Teck, Huttons’ senior director of research, the total number of properties transferred in FY21 was 63,914, up 19.9% from the previous year.

“The increase in stamp duty collected outpaced the growth in transaction volume.” This is owing to a rise in higher-value transactions in the residential luxury market and Good Class Bungalows (GCBs), as well as an active commercial and industrial investment market and land acquisition by developers,” Lee explained.

Commercial buildings such as One George Street, Cross Street Exchange, and JCube, for example, were sold for S$1.28 billion, S$810.8 million, and S$340 million, respectively.

25 properties along Thiam Siew Avenue sold for S$815 million in the en bloc market, Watten Estate Condominium for S$550.8 million, and Flynn Park for S$371 million. A plot along Marina View was sold for S$1.51 billion, Jalan Anak Bukit for S$1.03 billion, and Lentor Central for S$784.1 million in the government land sales market.

A GCB site on Cluny Road sold for S$91 million, Queen Astrid Park for S$86 million, and two sites on Chatsworth Road for S$78.06 million in the GCB market. Les Maisons Nassim sold three units in the non-landed luxury class, for S$75 million, S$59.77 million, and S$39 million.

Stamp duty collections were 4.8 percent lower in the first three months of 2022 compared to the same period in 2021.

“Due to seasonal reasons and buyers holding back after new cooling measures were brought out in December 2021, stamp duty collections fell in lockstep with property sales,” says Wong Xian Yang, head of research at Cushman & Wakefield. “Developers postponed big launches to examine market conditions following the cooling action.”

Despite the drop in sales volumes, property prices in the first quarter of 2022 continued to rise, with private residential and resale HDB prices climbing 0.7 percent and 2.4 percent, respectively, quarter on quarter.

“It’s possible that this helped alleviate the drop in stamp duty collections,” Wong said.

The government collected S$74.76 billion in total tax income in FY21, up 21.7 percent from S$61.41 billion in FY20. The amount for FY21 is also up 10.5 percent from S$67.65 billion in FY19.

Meanwhile, corporate income tax revenue in FY21 totaled S$18.2 billion, up 12.9% from S$16.11 billion in FY20 and 8.7% higher than S$16.73 billion in FY19.

Personal income tax receipts for FY21 totaled S$14.22 billion, up 11.6% from S$12.75 billion in FY20 and 15% more than S$12.37 billion in FY19.

Property taxes increased 49.3% to S$4.67 billion in FY21 from a lower base of S$3.13 billion in FY20, thanks to a property tax credit for qualified non-residential properties from January 1, 2020 to December 31, 2020. It fell 1.9 percent in FY21 compared to the S$4.76 billion collected in FY19.

Despite this, property tax income is expected to increase in FY22.

Property tax income is determined by the property tax rate, the number of taxed properties, and the annual value of each property, with at least two of the three variables expected to rise in the next two years, according to Nicholas Mak, ERA’s head of research and consultation.

For starters, property tax rates for residences with yearly values of more than S$30,000 and all non-owner occupied properties will increase in two increments, beginning in 2023 and again in 2024, with the increase being more significant for high-end homes.

Second, as more HDB flats, private housing, commercial and industrial properties are developed, the number of properties to be taxed continues to rise.

Third, the annual value of residential properties, as determined by valuers at the Singapore Inland Revenue Authority based on rental rates, is expected to rise in 2022 and maybe 2023.

Meanwhile, while the number of private homes purchased by foreigners increased 16.8% from 841 units in FY20 to 982 units in FY21, foreigner purchases as a percentage of total sales fell slightly from 3.1 percent in FY20 to 2.9 percent in FY21, according to Christine Sun, OrangeTee’s senior vice-president (research & analytics).

ERA’s Mak does not expect the ratio of international buyers to increase despite the removal of border restrictions. “The ABSD (extra buyer’s stamp duty) for non-permanent resident foreigners is excessive,” he claimed.

More property launches and a stronger economic recovery are projected to boost sales in the future, according to Sun.

“House prices are expected to grow even more this year.” As a result, the amount collected in stamp duty is expected to rise this year.”

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Property stamp duty collection leaps to S$6.8b

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