Paper 2 · Taxes & Leasing
Property Tax, GST & Tenancy Stamp Duty (Singapore)
Beyond the one-off stamp duties on a purchase, the exam covers the recurring tax on owning property and the duty on leasing it.
Property tax — based on Annual Value
Property tax is charged on the Annual Value (AV) — IRAS's estimate of the property's gross annual rent if let out. The rate depends on how the property is used:
| Property use | Property-tax rate |
|---|---|
| Residential, owner-occupied | Lower progressive rates on AV |
| Residential, not owner-occupied (rented/vacant) | Higher progressive rates on AV |
| Commercial / industrial | Flat 10% of AV |
GST
GST (9%) applies to the sale/lease of commercial and industrial property where the seller/landlord is GST-registered. The sale and lease of residential property is exempt from GST.
Tenancy (lease) stamp duty
A lease attracts stamp duty computed on the rent, usually paid by the tenant: roughly 0.4% of the total rent for a lease of up to 4 years; for a lease over 4 years, 0.4% of 4× the Average Annual Rent (AAR).
Worked example
A condo has an Annual Value of $36,000. If the owner lives in it, the lower owner-occupier progressive rates apply (a modest bill). If it's rented out or left vacant, the higher non-owner-occupier rates apply (a bigger bill on the same AV). A commercial unit with the same $36,000 AV is taxed at a flat 10% = $3,600/yr.
Common mistakes
- Assuming a vacant home keeps the owner-occupier rate — it doesn't.
- Applying GST to a residential sale/lease (it's exempt).
- Mixing up property tax (on AV) with stamp duties (on price).
- Forgetting tenancy stamp duty on the lease (usually the tenant's).
Edge cases & 'what-ifs'
- Vacant residential — no owner-occupier concession; taxed at the higher non-owner-occupier rate.
- Owner lives in it but rents out a room — owner-occupier rate can still apply (you genuinely occupy it); renting out the whole unit moves it to non-owner rates.
- Commercial / industrial — flat 10% of AV regardless of whether it's occupied, vacant or let.
- Owner posted overseas / unit empty — still non-owner-occupier rate unless it genuinely remains your residence per the rules.
- Newly completed (just TOP) — AV is assessed and tax applies once the unit is habitable.
- Tenancy stamp duty scales with rent and term — a longer/ pricier lease costs more (≈0.4%).
The trap
Assuming a vacant home gets the owner-occupier rate — it doesn't; owner-occupier rates require you to actually live there, so a vacant or rented home is taxed at the higher non-owner rate. Also: don't apply GST to a residential sale (it's exempt).
Property tax on the Annual Value
- Property tax is charged on the Annual Value (AV) — IRAS's estimate of the annual rent the property could fetch — not on its price or on the actual rent received.
- Owner-occupied homes get lower, progressive rates; non-owner-occupied (rented or vacant) homes are taxed at higher progressive rates; commercial/industrial property is a flat 10% of AV.
- A vacant property is still taxed on its AV — leaving it empty does not avoid property tax.
GST & tenancy stamp duty
- GST applies to non-residential property (sale and lease) where the seller/landlord is GST-registered; the sale and lease of residential property is exempt.
- A tenancy attracts lease stamp duty at 0.4%, normally paid by the tenant.
Exam takeaway
Split the taxes by timing & type: stamp duties (one-off, on purchase), property tax (recurring, on AV — owner-occupier vs not vs flat 10% commercial), GST (non-residential only), and tenancy stamp duty (on the rent).
Apply it · the IRAC method
An owner lives in one condo unit and rents out a second private residential unit. He is also considering buying a commercial shop unit from a GST-registered seller, and asks how tax applies across these.
- IIssue: How does property tax differ between the owner-occupied and rented units, is GST payable on the commercial purchase, and is the rental income taxable?
- RRule: Property tax in Singapore is assessed on the Annual Value (AV) of a property. Owner-occupied residential properties are taxed at lower owner-occupier tier rates, while non-owner-occupied (e.g. rented) residential properties are taxed at higher non-owner-occupier tier rates. GST applies to the sale/lease of commercial property (where the seller is GST-registered) but not to residential property. Rental income is taxable income and must be declared, with allowable deductions of qualifying expenses. Confirm current rates and rules with IRAS.
- AApplication: The owner's home is taxed at the lower owner-occupier rates, while his rented second unit is taxed at the higher non-owner-occupier rates on its AV. His commercial shop purchase from a GST-registered seller attracts GST, unlike a residential purchase. His rental income from the second unit is taxable and must be declared to IRAS, net of allowable expenses.
- CConclusion: Advise the owner that the two residential units are taxed at different property-tax tiers, that GST applies to the commercial (but not residential) purchase, and that he must declare the rental income. Direct him to confirm current tiers and rates with IRAS.
Worked case study · Section B style
An investor owns a vacant commercial shop and a tenanted condo, and signs a new 2-year residential tenancy. • Commercial + residential • A new tenancy
- (i) Property tax is based on Annual Value and still applies to the vacant commercial shop
- (ii) Sale/lease of residential property is generally GST-exempt; commercial is generally taxable
- (iii) The residential tenancy attracts tenancy stamp duty (usually borne by the tenant)
- (iv) A vacant property pays no property tax
- A.(i), (ii) and (iii) only
- B.(i) and (iv) only
- C.(iii) only
- D.All of the above
Show answer & explanation
Answer: A. (i)–(iii) are correct: AV-based tax applies even when vacant; residential is GST-exempt vs commercial taxable; tenancy stamp duty applies. (iv) is the trap.
Ready to test yourself?
Practise exam-style questions on Taxes & Leasing — with instant answers and explanations.
Practise Taxes & Leasing questions →Common questions
- Is GST charged on residential property in Singapore?
- No. GST applies to commercial property (when the seller is GST-registered), but the sale and lease of residential property is exempt from GST.
- Who pays tenancy stamp duty?
- Tenancy stamp duty on a lease is usually paid by the tenant and is computed based on the rent payable over the term of the tenancy.
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Join @resprepsg →Study material aligned to the public CEA syllabus. Not financial or legal advice — verify current figures with the relevant authority (IRAS, HDB, CEA, MAS).