No change to income tax framework for individuals who sell properties

The Ministry of Finance (MOF) said it has decided not to change the income tax framework with regard to individuals who sell their properties.

Currently, there is no blanket rule on how property sale gains are taxed as Inland Revenue Authority of Singapore (IRAS) considers the facts and circumstances of each individual case.

But a proposal was put up for public consultation between June 22 and July 14 suggesting that individuals who sold their properties should be certain that the gains they make would not be taxed 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.

After assessing the feedback from the public consultation, MOF said it has decided not to go ahead with the proposed change.

It said it received 64 comments on the proposed relaxation of income tax treatment, and 60 of them were not in support of the change. Some had highlighted that such a change could bias property purchase decisions towards investing in one bigger property rather than several smaller ones.

The public also felt that other factors apart from the frequency of property disposal should be considered when granting certainty of non-taxation. These are, for example, the holding period of the particular property, as well as the circumstances leading to the disposal.

However, to cater to all such factors would not be straight-forward and would make tax treatment for property disposals complex. After taking all these into consideration, MOF said it has therefore decided that it is best to retain the current framework.

MOF said IRAS considers various factors when levying tax on individuals who derive income from selling their properties. They 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, MOF said IRAS does not expect many individuals will be assessed as having to pay income tax on gains from selling their property.

Source : Channel NewsAsia – 21 Aug 2009

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