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Stamp Duty for Singapore Rental Property: 5 Things You Need To Know
•Tenant Griffin

Stamp Duty for Singapore Rental Property: 5 Things You Need To Know

Most property owners know about stamp duty for sale and purchase agreements. But stamp duty for rental property is often overlooked.

By the end of this post, you'll find out essential details so you don't get in trouble with the law.

What Is Stamp Duty for Rental Property?

Firstly, what's stamp duty? Stamp duty is a tax payable on any immovable property, such as real estate and company shares. In Singapore, it is paid to Inland Revenue Authority of Singapore (IRAS).

In real estate, stamp duty is payable on transfer of documents:

  • sale or purchase
  • mortgage loan
  • lease or tenancy agreement

When renting any property, be it residential, industrial, commercial property, a small bedroom or HDB flat, it's required by law to pay stamp duty on the tenancy agreement.

1. Why Stamp Tenancy Agreement?

Besides adhering to the law, stamping a tenancy agreement serves another even more important purpose – to make the tenancy agreement recognisable in court. Should there be any dispute on the tenancy agreement, the court will not admit the case if the tenancy agreement is unstamped.

Most importantly, both landlord and tenant want their tenancy agreement stamped so their respective interests in the agreement are protected by law.

2. How Much Does It Cost to Stamp Tenancy Agreement?

The stamp duty cost of a tenancy agreement is dependent on a number of factors. For a typical tenancy agreement, it's safe to assume that the stamp duty will be based on total rental and duration of rent. The stamp duty for a typical rental scenario will be 0.4% of total rental over the entire duration of lease.

Monthly Rental: $1,000
Lease Period: 2 Years
Total Rental: $1,000 x 24 = $24,000
Payable Stamp Duty: $24,000 x 0.4% = $96

If the Average Annual Rent (AAR) does not exceed $1,000, you're exempted from paying stamp duty. Here are some examples:

Example 1

Landlord rents a space to the tenant at no charge for one year. In other words, the tenant is renting the space for free.

Lease Period: 1 Year
Total Rental: $0
Average Annual Rent: $0
Payable Stamp Duty: $0

In this example, the tenant isn't required to pay stamp duty as the AAR is $0.

Example 2

Tenant rents a space for free in the first year, and $50 per month in the second year.

Lease Period: 2 Years
Total Rental: $0 x 12 Months + $50 x 12 Months = $600
Average Annual Rent: $300
Payable Stamp Duty: $0

The tenant doesn't need to pay stamp duty as the AAR is less than $1,000 ($600 over 2 years).

Example 3

Landlord rents a space to the tenant at $80 per month for three years.

Lease Period: 3 Years
Total Rental: $80 x 36 Months = $2880
Average Annual Rent: $2880 / 3 = $960
Payable Stamp Duty: $0

Stamp duty is exempted since the AAR is under $1,000 ($2,880 over 3 years).

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3. Who Should Pay for Stamp Duty?

It’s surprising that so many property owners get this question wrong.

According to the Stamp Duties Act, the tenant is responsible for the stamp duty on the tenancy agreement. If it’s the tenant’s responsibility, why do landlords need to care?

The thing is: It’s not uncommon for the landlord to help stamp the tenancy agreement first. And then get the tenant to reimburse for the stamp duty paid.

There are also cases where the landlord, out of goodwill, pays for the tenant’s stamp duty.

However, if a tenant refuses to pay stamp duty, it could be a warning sign of a troublesome tenant.

4. Where to Stamp Tenancy Agreement

In Singapore, all tenancy agreements are stamped online at IRAS e-Stamping Portal. It takes 5-10 minutes and you get the stamp certificate immediately.

5. Late Payment of Stamp Duty

A tenancy agreement should be stamped no later than fourteen days from the date of signing if it’s signed in Singapore. On the other hand, if the agreement is signed overseas, it must be stamped within 30 days from the date it’s received in Singapore.

If payment is late less than 3 months, IRAS imposes a penalty of $10.

If payment is late by more than 3 months, the penalty is $25 or four times of duty payable, whichever is greater. IRAS may take further actions to recover unpaid duty.

Conclusion

In this post, we’ve covered stamp duty for rental properties in detail. Be sure to get your tenancy agreement stamped on time.

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