Stamp duty is not just something that needs to be paid when buying a property, it is also something that needs to be taken into consideration – and indeed paid – when renting a Singapore property or part of a property. Here is a comprehensive guide, on what to pay, when to pay, and how to pay, plus some important advice on avoiding potential legal issues if any dispute arises.
Who has to pay the Stamp Duty in a Rental Agreement?
It is the tenant who is liable for stamp duty in Singapore, when he or she rents part or the whole of a residential property, or when they agree to extend or renew the tenancy agreement for said property.
When does the Stamp Duty need to be Paid?
Stamp duty is payable within 14 days of the tenancy agreement being signed (this is extended to 30 days if the document is signed overseas). There are hefty fines for late payment.
How much Stamp Duty do I have to Pay?
That depends on several factors such as the amount of rent, the type of rental agreement and the length of the agreement. The vast majority of people will be on a fixed rent agreement. In order to work out the stamp duty you are liable for, you will need to know your total monthly rent, including any extra you pay for furniture, and the lease period of the property. Multiply these, to find the total rent for the duration of the lease period. The stamp duty is 0.04% of that total.
So, if you had signed a rental agreement for 2 years, and the monthly rent was $2500, the calculation would be as follows:
($2500 X 24) x 0.4% = $240
So the total amount of stamp duty you would need to pay, within 2 weeks of signing the agreement would be $240.
If the agreement was for 18 months, and the monthly amount was $4500, the equation would look like:
($4500 X 18) x 0.4% = $324
In this example the amount of stamp duty you would be liable for is $324.
What is the best way to pay Stamp Duty?
By far and away the best way to pay for your stamp duty is with the e-stamp system. This is a computer based application, and is totally secure. The traditional way of physically stamping and paper franking is being phased out and it will soon be all done through e-stamping.
Can I Pay Stamp Duty to my Landlord Instead?
Some people, instead of paying the stamp duty straight to the government, pay it to the landlord. This is something we would definitely not recommend you to do so. In every single case, whether it is a new launch condo or an HDB apartment, the tenancy agreement needs to be stamped and the stamp duty is payable to IRAS (Inland Revenue Authority of Singapore)
E-stamping is an easy and straight forward process, you only need to have access to the internet, and it covers both you and the landlord should any dispute arise. If it hasn’t been stamped then should there be any problems or disputes further down the line, the documents are not legal, and you could be liable for fines, or to pay the amount again.
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