SALE AND PURCHASE

Costs relating to sale and purchase of real estate


Tax

Under the Stamp Duties Act (Cap. 312), the purchaser may be liable for the payment of Additional Buyer's Stamp Duty (ABSD) in addition to the buyer’s stamp duty (BSD) for the acquisition of property, while the vendor may be liable for seller's stamp duty (SSD) for disposition of property. However, commercial properties are currently exempted from the ABSD and SSD regime.

Current stamp duty payable will be 0.2% of the higher of the purchase price

If a purchaser acquires a commercial property via a share transfer of a company, the current stamp duty payable will be 0.2% of the higher of the purchase price or the net asset value of the shares. However, if the company's tangible assets are primarily residential properties, additional conveyance duty (ACD) may be payable on such transfers, in addition to the existing stamp duty of 0.2%. Exemptions may apply to transfers between associated companies.

For specific tax rates, please click here.

Estate agent's fees

The estate agent arranges for listing and viewing of property. He/she may assist the vendor and purchaser to negotiate key commercial terms of the sale and purchase. The estate agent may also at times provide a standard form sale contract (which may be reviewed and commented by lawyers).

He/she also assists parties in matters like preparing an inventory list and arranging for inspection of the property if so agreed between the contracting parties. Estate agents' fees are charged at a usual rate of 1% of the purchase price but this is open to negotiation. Typically, the fees are payable by the vendor from the sale proceeds.

Legal fees

Lawyers are appointed to, amongst others, negotiate, prepare, execute and register (where applicable) the necessary documents (e.g. the sale contract, instrument of transfer, and directors' and shareholders' resolutions).

The purchaser's lawyer will conduct title review and investigation of the property, and the vendor's lawyer will answer title requisitions (if any) raised by purchaser's lawyer and arrange to remedy any title defect(s).

In a share transfer, the legal due diligence will be carried out by the lawyers.

The vendor's lawyers are also typically involved in discharging the existing mortgage (if any), while the purchaser's lawyers would help in the legal documentation for financing the purchase if the bank does not appoint a separate set of lawyers.

The purchaser's lawyers will typically arrange for stamping and registration of the relevant instruments.

There is no fixed scale of legal fees, and the parties will negotiate the applicable fees with their respective lawyers. However, the Law Society of Singapore has set out the following recommended guidelines to assist solicitors and clients in reaching a fee arrangement which is fair and reasonable, having regard to the circumstances of the individual case:

In a share transfer, the legal due diligence will be carried out by the lawyers

Other fees

Stamp duty is applicable (For specific tax rates, please click here).

If you have any questions or comments about this report, please get in touch.

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LEGAL AND REGULATORY