Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam said this in a written response to questions in Parliament from MP Lim Biow Chuan.

Mr Tharman also provided clarification on when gains from the sale of a property are taxed and when they are not.

Singapore imposes taxes on income but not on capital gains. In determining whether gains derived from the sale of a property are considered capital or income, the Inland Revenue Authority of Singapore (IRAS) considers “the actual facts and circumstances surrounding the sale.”

This means that IRAS will assess the situation leading to the sale, including the holding period of the property and the frequency of such sales. IRAS will subsequently inform the taxpayers accordingly if it assesses, after its review, that the property gains are income in nature and are therefore taxable.

Before selling their properties, taxpayers can apply to IRAS for an advance ruling to ascertain whether the gains from their intended property disposal are taxable.

Meanwhile, property trading companies are taxed on their property disposal gains as trade income.

The tax treatment for property trading companies is similar to income tax on any other type of trade income. The IRAS does not track trade income by how the trade income is generated.

Source : Channel NewsAsia – 15 Oct 2012

The post 201 individuals, 39 companies subject to income tax on property disposal gains in last two years appeared first on LushHomeMedia.

Speaking at a community event on Sunday, Second Finance Minister Lim Hwee Hua said certain property investors had wanted more certainty regarding the current rules.

Proposed changes to tax individuals who sell property before a four-year period were designed to shed some light on what defined a trader who sells property as a main source of income.

Public consultations were held, where more than 90 per cent of respondents said the system should be kept simple.

Property observers agreed with them, saying the current rules would avoid confusing sellers – which is critical in a recovering property market.

Analysts also said foreign investors are looking into Singapore as a potential market, so any adjustments to the tax regime may send them the wrong signal.

Mrs Lim said: “We wanted to give some certainty to a group of property owners. But it looks like there was some confusion and people were a little concerned about what the signals were. So based on the feedback, we decided that since that is not going to be well-understood, it is probably advisable to withdraw that proposal.”

For now, property sellers will continue to be judged on a case-by-case basis to determine if they should be taxed.

Source : Channel NewsAsia – 23 Aug 2009

The post Property gains tax proposed because of earlier feedback appeared first on LushHomeMedia.

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

The post No change to income tax framework for individuals who sell properties appeared first on LushHomeMedia.

Mr Tan was invited to a property launch only to be told that all the units had already been sold. The following day, some of the properties were listed in the market for $100,000 more.

He viewed these speculators as the bane of the property market and a possible reason why some of our brightest, including expatriates, are leaving Singapore. To mitigate the problem, he suggested that the authorities introduce a capital gains tax.

I sympathise with Mr Tan’s frustration. However, I cannot agree with his suggestion to introduce a capital gains tax.

Such a tax will have disastrous consequences not just on the property market but also on the capital market.

It may well eliminate the competitive edge that has made Singapore a financial hub in the Asia-Pacific region.

I am sure there are targeted ways to curb property speculation which will not have a spill-over effect into other sectors of the economy.

One measure could be to stop launching properties before they are completed. Another could be taxing gains on properties that have been held for less than three years.

I urge the authorities to come up with measures to curb speculation but more importantly, to establish rules that are clear and transparent to all participants. These rules would stabilise the market and help Mr Tan and others like him to purchase properties at reasonable prices.

Source : Today – 21 Jul 2009

The post Think before you tax appeared first on LushHomeMedia.

In fact, taxes should be imposed on every property transacted irrespective of the number of times a sale is carried out.

I was recently invited to a property launch only to be informed that all units had already been sold.

True to form, the in-demand units were advertised openly the following day for $100,000 more than the price at which the developer had sold them – when the project had not even been built.

What is capital gains tax compared to this sort of profit? It’s a pittance!

Many other countries have a capital gains tax policy. Singapore should also have such a policy or property prices will continue to skyrocket when the economy rebounds.

The four-year period where taxes are to be paid if more than one property is transacted should be reviewed periodically to ensure that house prices stay under control.

A check on the Internet shows that a 1,000 sq ft condominium unit in Australia or Canada goes for between $200,000 and $300,000, while in Singapore we might pay close to $1 million for an average home.

Could such prohibitive property prices be part of the reason why our brightest talents choose to move abroad or why expatriates fail to sink roots here?

It is time the authorities rethink Singapore’s housing policy so that a roof over our heads becomes more competitive and affordable.

Gilbert Tan Hee Khian

Source : Today – 20 Jul 2009

The post Every transaction should be taxed appeared first on LushHomeMedia.

Analysts Channel NewsAsia spoke with said that it is because some are concerned the proposed amendment may hurt the property sector and Singapore banks.

The Singapore residential property market is showing signs of picking up, but analysts say the proposed tax amendment may hurt sentiment and derail the rebound.

That is because potential buyers may hold back on fears that if they sell more than one property during a four-year period, they may then be taxed on the profits.

The Finance Ministry has stressed that the proposed change is not an anti-speculation measure.

However, it is still something to think about for those with more than one property, or planning to own more than one.

Chong Lee Siang, partner at International & Corporate Tax Services at Ernst & Young, said: “It probably comes as a surprise to a lot of people. But the government has said that it’s not an anti-speculation measure so that may be a little assuring, but still (at the) back of people’s minds would be ‘when will I be taxed?’

“As you can see, the public is reacting and giving its feedback and expressing its concerns. So hopefully, the government will take a while to think through it more carefully and see what would work better or make people more comfortable.”

If the proposed change for the tax policy goes through, observers say local banks would get hit badly as housing loans make up a large chunk of their business.

Looking at the housing rental agreements, some say the government may want to consider introducing a two-year period of non-taxation if a person sells only one property, instead of the suggested four years.

As many HDB flats are financed through banks today, some believe the suggested tax amendment will hurt the banks’ portfolio.

Jeremy Goh, associate professor at the Lee Kong Chian School of Business in the Singapore Management University, said: “The banking business is basically taking deposit and making loans. If this proposal puts a damper in the market, then it will definitely have an impact on the bank.

“There will be less people needing loans, or people staying out of the housing market. So the demand for loans will be somewhat affected.”

The public consultation for the draft Income Tax (Amendment) Bill ends next Tuesday. So far, It has attracted about 50 responses.

Source : Channel NewsAsia – 10 Jul 2009

The post Analysts say more feedback should be gathered before amending tax policy appeared first on LushHomeMedia.

Individuals who sell a property on or after Jan 1, 2010 will automatically not be subject to income tax, if he has not sold other properties in the previous four years. Even if he has, Iras will determine if a tax on income should be levied, just like existing practice.

What the situation is now:

When an individual sells a property for a profit, Iras decides if the gain is income in nature based on the facts of the sale. Factors include circumstances leading to sale, how long the individual held the property, how frequently he was selling properties in the past.

Intent of proposed change:

To provide certainty of non-income-taxation to individuals who sell a property.

Unintended effect:

Perceived to be an anti-speculation measure by some dampened market sentiment.

Source : Today – 10 Jul 2009

The post Draft income tax (admendment) bill 2009 appeared first on LushHomeMedia.

That is because property owners who do not sell properties frequently will have the assurance that they will not be taxed on the profits made from such sales.

All properties, from public flats to industrial buildings, will be affected by the proposed tax change.

Under the proposal, the law will be changed to make it clear that profits made from selling properties will not be taxed if the property owner has not sold any property within a four-year period.

There have been concerns that this means anyone who sells more than one property within a four-year period will have to pay taxes on their profits.

In its statement on Thursday, the Finance Ministry said the proposed change is not an anti-speculation measure.

As it is, whether individuals who sell properties more frequently are subject to income tax depends on the circumstances of each case, such as how long the owner has been holding on to the property.

But with the change, property owners will know that if they have not sold any property during the preceding four years, profits made from the sale of a property will not be taxed.

It is understood that every year, about 100 individuals are taxed on their income from frequent property transactions.

Analyst Nicholas Mak said: “In May 1996, when anti-speculation measures were announced, it was a whole series of measures. It took the market by surprise. Today, it is nothing in comparison with what happened in 1996. This is more of a consultative paper for an amendment to a law, and the government is seeking feedback.”

Still, analysts said the move will have an impact on the property market.

Donald Han, managing director of Cushman & Wakefield, said: “In view of this forthcoming implementation for 1 January next year, it might curtail some reactive buying, might take some hot air away from current market activity. It might make buyers think twice in terms of buying more than what they require.

“It does take speculative activity out of market. At the end of the day, it’s good, because we’re looking at nursing the current recovery of the marketplace and we don’t want prices to run out of the current economic recovery in that sense. So it should be in sync with market conditions.”

Mr Mak said: “The dust will settle and I think people will probably go back to the way how things were. Properties will still be launched and investors will still come into the market.

“But some may see today’s announcement has a bit of a warning shot. The government could, in effect, come in to assess any individual who has sold more than one property in the four-year period. Speculators thinking of flipping a number of properties in a 4-year period have to do it with a certain amount of caution.”

For investors, the proposed four-year period could pose a disadvantage, especially since property boom-bust cycles are now shorter than before – at about two to three years instead of six to seven.

Mr Han said: “What used to be a 6- to 7-year (property boom-bust) period now probably would last 2, 3.5 years, in that sense. If you hold for a period, it might last you over a whole property cycle and it might eventually wipe off any gains.

“But the bottom line is that in any investment, the government is saying that if you buy properties and make money, then pay your taxes within the 4-year period. I think that’s fair.”

The government said it is proposing the tax change as part of its regular review of the Income Tax Act, and that Singapore’s tax rules are aimed at taxing people who make an income out of their property transactions.

Singapore does not have a capital gains tax, unlike many countries.

Source : Channel NewsAsia – 9 Jul 2009

The post Finance Ministry says it is not tightening tax policy on properties appeared first on LushHomeMedia.