RES exam question on Taxes & Duties: A Singapore Citizen buying his second condominium takes a $1,200,000 bank loan secured…
A Singapore Citizen buying his second condominium takes a $1,200,000 bank loan secured by a legal mortgage over the unit. He asks what stamp duty the mortgage document attracts. Which statements are correct? (i) Mortgage duty is 0.4% of the loan with no cap, so he pays $4,800 (ii) Mortgage duty on a legal mortgage is 0.4% of the loan amount, capped at $500 (iii) Mortgage duty is separate from the BSD and ABSD payable on the purchase (iv) An equitable mortgage attracts duty at 0.2% of the loan amount, also capped at $500
- A(ii), (iii) and (iv) only
- B(i), (iii) and (iv) only
- C(i), (ii) and (iii) only
- D(i), (ii), (iii) and (iv)
Show answer & explanation
Answer
A. (ii), (iii) and (iv) only
Explanation
A mortgage document is itself chargeable with stamp duty. Under IRAS's rates effective 22 Feb 2014 (unchanged at 22 Sep 2026), a legal mortgage attracts duty of 0.4% of the loan amount, capped at $500, so (ii) is correct. On a $1,200,000 loan, 0.4% would be $4,800, but the cap limits the duty to $500. (iv) is correct: an equitable mortgage is charged at 0.2% of the loan amount, also capped at $500. (iii) is correct: mortgage duty is paid on the mortgage instrument and is separate from the BSD and ABSD charged on the purchase document. Trap: applying the 0.4% rate to the full loan without the cap, or folding mortgage duty into the ABSD computation.
Why the other options are wrong
- (i) is wrong because it ignores the $500 cap.
Study the concept behind this question: Stamp Duties Explained: BSD, ABSD & SSD (Singapore, 2026)
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