Before you get all excited and get ready to leap into purchasing your second property in Singapore, it is important that you have an idea about the rules surrounding it.
Sure, they aren’t exactly the most exciting or interesting things to know, but an informed and knowledgeable investor is a smart investor.
So, what rules are there?
In Singapore, there are the private and public (HDB flats) types of housing categories. can be broadly classified into private and public. The private properties include the EC (Executive Condominium) and HUDC (Housing and Urban Development Company).
If you stay in a HDB flat whether it is new or a resale or an EC, there is a Minimum Occupation Period (MOP) restriction of 5 years that you must fulfil before you can think of getting a second property.
However, if you currently stay in a private property or HUDC, you can be exempted from the MOP.
2. Loan-to-Value (LTV) Ratio
Your LTV ratio drops progressively for your second property and accordingly to the length of the tenure. For loan tenures up to 30 years, it will be at 50%, and beyond that or beyond your 65th birthday, it will reduce to 30%.
3. Additional Buyer Stamp Duty (ABSD)
It is usually necessary for you to pay the stipulated 7% Additional Buyer’s Stamp Duty (ABSD) on either the prevailing property value or purchase price of your second property, whichever is higher.
PRs are required to pay 10% and Foreigners 15%. You can find out more about ABSD in my separate blog post.
4. Rental Rates
You should go about finding the average rental rates in your area before deciding on a rate that you want to charge. It is advised that you settle on a rate that can at least cover your monthly loan repayments.
It is also encouraged that you prepare yourself financially with savings for possible vacancies of at least 2-3 months.
5. Property and Income Tax
If you possess a second property with the intention to occupy it personally, you will come under the same property tax scheme as the one you are paying for your first property.
On the other hand, if you intend to purchase your property for rental purposes, there is a 10% flat tax rate that you will have to bear on your second property’s annual value.
Of course, the rules don’t just stop here. For an extensive and full range of the rules, feel free to contact me to know more – I will gladly supply you with all the information you need.