Singapore now has highest property taxes and levies

It edged out New York in a new survey with its hefty transactional costs at over 2.5% of property value per annum.

New York, Paris, Mumbai and Tokyo also hovered at above 2% mark, but below Singapore’s top-ranking rate. This percentage value represents the costs of buying, selling and occupation taxes totaled over a five-year period and apportioned on an annual basis.

Breaking it down, costs of purchasing are the second highest globally in Singapore with the recent introduction of the 10% stamp duty for foreigners. It is now just behind Hong Kong as the most expensive city to buy property.

“Hong Kong is the most expensive of our cities in which to purchase property, reflecting the high initial cost of property and stamp duty (3% to 4.25%). Singapore ranks second. The city state recently announced an additional 10% stamp duty to be levied on foreigners’ property purchases in an attempt to cool the market. For permanent residents, an additional 3% is imposed on second and subsequent residential properties, and 3% for Singaporeans buying their third and subsequent property,” said Savills in its World Cities Review Spring 2012 report.

“These measures are in addition to existing stamp duty costs. This is likely to have an impact on sales, and prices, particularly in the upper tiers of the Singapore market,” it added.

Property buyers and owners also face comparatively higher costs of occupyin and selling in Singapore than most other cities in the world.

“Once a property has been purchased, the taxes associated with its occupation need to be considered. The most expensive three (Hong Kong, Singapore and Paris) all have property taxes calculated as a percentage of the rateable value of the property,” said Savills.

“Those with fixed property taxes fare better, London’s banded council tax ranks it fifth, followed by Sydney, Moscow and Mumbai. Shanghai only carries occupancy taxes on investment property calculated on 0.4% to 0.6% on 70% of the property value, while New York carries no direct occupancy taxes (these are captured in income tax),” it said.

“Exit costs are an important consideration in the decision to rent or buy. Measures have been introduced in Singapore, Hong Kong and Shanghai to penalise those who sell property within short time periods. In Hong Kong, property purchased after November 2010 and held for less than six months is subject to a 15% levy,” it added.

“In Singapore, from January 2011, a 16% levy applies if sale occurs within the first year. Lower levies apply if transacted between one and three years. In the upper tiers of the market in Shanghai, a 5.65% ‘business tax’ now applies on the sale price if transacted within five years,” it said.

“The impact of these measures on the SEU vary depending on the period the property is held. Sale costs account for 16% and 17% of the value of the executive unit in Hong Kong and Singapore respectively, if transacted within six months of purchase. With reduced penalties for a longer hold, transaction costs in these cities fall to just 1.1% and 1% if transacted after five years. At this point, New York, with its numerous property-specific taxes and charges, is the most expensive, at 9%,” it said further.