u.s. expat tax guide – singapore
What happens if I want to sell my rental property in Singapore as an American?
In Singapore, there is no capital gains tax on individuals, meaning you won’t owe any tax there.
However, the US does tax capital gains, so you must report the sale on your US tax return. If you have a profit from the sale, it will be taxed based on your selling price minus the original purchase price and any improvements made to the property.
There is a way to reduce or avoid US capital gains tax.
If you lived in the property as your main home for at least two of the last five years, you may qualify for the Section 121 exclusion, which allows you to exclude up to US$250,000 of profit (US$500,000 if married filing jointly) from taxes.
Some expats even move back into their rental property for two years before selling to take advantage of this tax break.
But if you never lived in the property and only rented it out, you will likely owe capital gains tax in the US. Since Singapore doesn’t tax the sale, you also can’t use a foreign tax credit to reduce your US tax bill.
Additionally, for those who have rented their property part-time, such as through Airbnb, the IRS still requires you to report rental income on Schedule E of your tax return. You can deduct expenses, but only for the portion of the home that was rented out.
How do I sell my rental property in Singapore?
Selling a property in Singapore typically involves a few key stages, and the process can be relatively quick if you plan well:
- Listing and Marketing
- You can advertise your property yourself or hire a Real Estate Agent. The agent will help you figure out a good selling price (often with a Competitive Market Analysis), market the property, and arrange viewings for potential buyers.
- Necessary Documentation
- Gather details such as your outstanding mortgage amount (Outstanding Loan), any CPF Used (if you’re a permanent resident who used Central Provident Fund savings), and relevant paperwork like the Option to Purchase (OTP) forms.
- If you’re renting out the property, you might have a Tenancy Agreement. Potential buyers may want the property to be vacant or may agree to keep the tenant under certain conditions.
- Negotiations and the Option to Purchase (OTP)
- Interested buyers usually pay a deposit for the OTP, often about 1% of the selling price. Both sides then finalize the sale price, completion date, and any other conditions (like repairs or furniture inclusion).
- Closing the Sale
- Once the buyer exercises the OTP (usually within a set time), you proceed to completion. You’ll pay off any Mortgage Early Repayment Fees if you’re settling a loan, as well as any condo Maintenance Fees and administrative charges.
- You receive Cash Proceeds after deducting these costs and your outstanding mortgage.
What taxes and fees apply when selling property in Singapore?
- Seller’s Stamp Duty (SSD)
- If you sell your property within a certain “holding period” (e.g., within three years of purchase, though rules can change), you might pay SSD to the Inland Revenue Authority of Singapore (IRAS). The rate depends on how long you owned the property.
- Additional Buyer’s Stamp Duty (ABSD)
- This usually applies to buyers, but if you purchased your property as a foreigner, you may have paid ABSD at that time, which affects your overall profit. ABSD doesn’t reduce or offset your sale taxes; it’s just a cost you paid when buying.
- Property Tax
- Make sure all Property Tax due is settled. If you owe any back taxes, they must be paid before or during the sale. This tax is separate from income tax.
- Real Estate Agent Commissions
- Agents typically charge about 1–2% of the sale price (plus GST if they’re GST-registered). This fee comes out of your proceeds upon successful sale.
- Legal and Conveyancing Fees
- You’ll pay a conveyancing lawyer for paperwork and title transfers. Costs vary but generally include Administrative Fees for handling the sale process.
- Mortgage Early Repayment Fees
- If your loan has a “lock-in” period, ending it early might incur a penalty. Confirm with your bank before listing the property.
Once these costs are deducted, you’ll see your net proceeds from the sale. Keep in mind that if you sell the property at a profit, the US may treat that as a capital gain, which can be taxed on your US return.
What challenges do Americans face when selling property in Singapore?
- Legal Restrictions or Limited Buyer Pool
- Foreign ownership rules can restrict certain property types (like landed homes). If your property is in a category with extra rules, you might have fewer potential buyers.
- Market Dynamics and Economic Conditions
- Changes in Singapore’s real estate climate or global economic factors may affect how fast you can sell and at what price.
- Tenancy Agreements
- If the property is rented out, some buyers may want it vacant, while others might agree to “inherit” the tenant. Communicate with your tenant early to handle viewings and possibly end the lease if the buyer insists on vacant possession.
- Transferring Funds and US Tax Implications
- After selling, moving large sums back to the US can involve bank regulations and currency exchange steps.
- Selling a rental property might trigger capital gains tax in the US, and if you took depreciation deductions on your US returns, you may need to “recapture” that depreciation (adding to your taxable gain).
- Cultural and Communication Barriers
- While many agents and lawyers in Singapore speak English, different customs around sales negotiations or property handovers can still require patience and clarity on both sides.
Understand the tax implications of selling your Singapore property and how to maximize your US tax benefits. Contact us today.
Are there restrictions for foreigners selling property in Singapore?
Singapore has rules on which types of properties foreigners can own and sell, mainly set out in the Residential Property Act and related regulations. Here’s what American sellers should know:
- Property Type Matters
- Private Residential Property: Generally okay for foreigners to buy and sell, but if it’s a “landed” home (like a house with its own land), you probably needed special approval when buying. Selling might still require confirming you met all rules.
- HDB Flats: Typically reserved for Singapore citizens or permanent residents. Foreigners rarely own HDB units unless under unusual circumstances (e.g., part of a mixed family).
- Sentosa and Other Restricted Areas: Some properties—especially certain landed homes on Sentosa—require Statutory Approval from government agencies. If you own such a property, confirm any special steps needed before selling.
- Additional Buyer’s Stamp Duty (ABSD)
- ABSD often affects buyers, but if you bought the property as a foreigner, your buyer may factor their higher ABSD cost into any offer. This can reduce the buyer pool or sale price.
- Property Trader Rules
- Singapore normally doesn’t tax profits on selling a home if it’s considered a capital gain. But if IRAS views you as a Property Trader (someone who buys and sells frequently), it might treat proceeds as income instead of a capital gain.
- Commercial Properties
- If you’re selling a commercial property instead of a residential home, there are typically fewer restrictions for foreigners. The process is similar, but you should still check local regulations.
What legal and financial considerations should sellers be aware of?
Selling property in Singapore involves several legal steps and financial responsibilities.
- Hiring a Conveyancing Lawyer
A conveyancing lawyer specializes in handling property sales and ensures the process follows Singapore’s legal requirements. They help with:
- Drafting and reviewing contracts – The Option to Purchase (OTP) and Sale & Purchase Agreement are key legal documents needed for the sale.
- Conducting title searches – This confirms that the property is legally owned and free of disputes.
- Managing payments and legal paperwork – Your lawyer will handle transactions and coordinate with banks if a mortgage is involved.
Why is this important?
A lawyer ensures that all paperwork is correct and that the transaction is legally valid.
- Gathering Necessary Documents
Before selling, you will need to prepare several documents:
- Title Deed – This proves that you legally own the property.
- Sale & Purchase Agreement from when you bought the property – This shows the original terms of purchase.
- Mortgage Statement – If you have a loan, this will outline the remaining balance.
- Property Tax Receipts – These confirm that all taxes have been paid.
- Paying Off Any Existing Mortgage
If you still owe money on your mortgage, you must pay it off before completing the sale. The steps include:
- Inform your bank that you intend to sell.
- Request a loan redemption statement – This shows how much you need to pay to clear the mortgage.
- Discharge the mortgage – Once paid off, the bank will remove its legal claim on the property.
Your lawyer will handle the mortgage discharge and ensure the property is clear for sale.
- Property Sale Process
The typical steps for selling property in Singapore are:
- Issuing the Option to Purchase (OTP) – This document gives the buyer the right to purchase the property within a set period (usually 14 days).
- Buyer Pays a Deposit – The buyer typically pays 1% of the purchase price when the OTP is issued and another 4-9% when signing the Sale & Purchase Agreement.
- Legal and Financial Checks – Your lawyer verifies the property’s legal status and ensures all required payments are made.
- Completion of Sale – The remaining balance is paid, and ownership is transferred to the buyer.
This process takes about 8-12 weeks from the time the OTP is signed.
- Financial Costs of Selling Property in Singapore
Seller’s Stamp Duty (SSD)
- If you sell your property within 3 years of buying it, you may have to pay Seller’s Stamp Duty (SSD):
- 1st year: 12% of the sale price
- 2nd year: 8% of the sale price
- 3rd year: 4% of the sale price
- After 3 years: No SSD applies
Capital Gains Tax
- Singapore does not have capital gains tax on property sales. However, if the government considers you a frequent property trader, your profits may be taxed as income.
Other Costs to Consider
- Legal Fees – Conveyancing lawyer fees typically range from SGD 2,500 to SGD 4,000.
- Agent Commission – If you use a real estate agent, they usually charge 1-2% of the sale price.
- Mortgage Discharge Fees – If you have an outstanding mortgage, banks may charge SGD 300 to SGD 500 to process the loan closure.
- Property Market Trends & Valuation
- Indicative Valuation – Banks and property agencies provide an estimated property value based on market trends.
- Consulting Financial Advisers – Experts can help assess if it’s the right time to sell based on market demand.
- Monitoring Market Trends – Check rental yields, supply and demand, and recent sale prices of similar properties.
Ankurita Lala, an IRS Enrolled Agent with 6 years of expat tax experience, specializes in helping individuals and entrepreneurs navigate the complexities of foreign business ownership. *Schedule a consultation with Ankurita today.
*30-minutes US$247.
