Response From IRAS about Seller's Stamp Duty (SSD)

So, my conversations with IRAS has been concluded recently. Needless to say, IRAS will not waive my SSD or even reduce the amount.

You can read the full exchange below.
To sum it up from my perspective, IRAS says they have no legal power to do anything.
Wow... it must be great being IRAS.


 ************** EMAIL EXCHANGE WITH IRAS *************
From: IRAS - eStamp <eStamp@iras.gov.sg>
Date: Thursday, 20 April 2017 at 2:21 PM
To: <Nickleman>
Cc: 
Subject: RE: Request for exemption from Sellers' Stamp Duty

Dear Mr **

We refer to your email of 03 April 2017.

Please find our replies to your queries in your email below.

Thank you.

Warm Regards,
****Assistant Manager (PT-Valuation & Stamp Duty) | Inland Revenue Authority of Singapore
(65) 6351 **** (DID) | (65) 6351 3694 (fax) | 
http://www.iras.gov.sg  |  http://twitter.com/IRAS_SG
___________________________________________________________________
A Partner of Taxpayers in Nation-Building and Economic Development

Confidentiality: Privileged and/or confidential information may be contained in this email or its attachments. If this email has been sent to you by mistake, please notify the sender and delete it immediately. The retention or communication of this email’s contents or its attachments to an unauthorised person is prohibited and may be an offence under the Official Secrets Act (Cap 213).

From: <Nickleman>
Sent: Monday, 3 April, 2017 1:33 PM
To: IRAS
Cc: IRAS - eStamp <eStamp@iras.gov.sg>
Subject: Re: Request for exemption from Sellers' Stamp Duty

Dear Ms/Mdm ***,

Thank you for taking the time to clarify my concerns.

While the law is clear on the topic, I would like to highlight on-the-ground impacts of this.

“Though you have not legally transferred your property, under the stamp duty law (especially for ABSD), you are considered to have disposed of your current property and it is excluded from your count of property owned. Hence, if the Shunfu Ville property is your only property, when you buy your next residential property, it will be considered your first count.”
·         Stamp duty law considers my property sold when it is not yet legally sold. This appears somewhat contradicting. And what happens if the sale approval is overturned by the Court of Appeal? Naturally, I expect my SSD to be refunded to me, but is this the case if stamp duty law is interpreted this way? If appeal (objection to collective sale) is successful, am I deemed to have “purchased” a new property? I sure hope not.

IRAS: In the event that the sale approval is overturned by the Court of Appeal, SSD will be refunded to you.
In addition, if you had already purchase the new residential property (without paying for ABSD-first count for Singapore Citizen) prior the legal completion of your en bloc unit, and the sale approval is overturned by the Court of Appeal, you are responsible to disclose to IRAS of the failed sale of your en bloc unit and the circumstances of the aborted sale. Whether ABSD would be clawed back from you on the new property purchase (considered as second property count) and what further action would be taken by IRAS would depend on the circumstances of the case. 
·         Like I have highlighted before, legal completion takes time, which means the owners get paid by the buyer, late. Even if we can administratively buy another property as “first count”, how many owners will actually have the cash upfront to do so before legal completion? In the meantime, we are at the mercy of market forces. In addition, there is the risk of the Court of Appeal overturning the approval of the collective sale. Buying a property at this stage is risky, and we were duly advised by our collective sale committee of this risk.

IRAS: As the ownership of a property is a personal decision to be made by the owner after considering the tax and non-tax implications, owner would have to make a considered decision whether to proceed with the purchase or not.

“We sincerely regret to inform you that there is no provision under the Stamp Duties Act to exempt SSD for dissenting owners who do not agree to the collective sale. However, you may wish to note that the collective sale is governed under the Land Titles (Strata) Act in which an application has to be made to the Strata Title Board for an Order allowing the sale of all the units and the land in the development. We understand that the Board will not approve an application if it is satisfied that the dissenting owner will suffer a financial loss if the sale proceeds for his unit are less than what he paid for the unit. Stamp duties are one of the deductions the Board will take into account in evaluating if the dissenting owner is suffering any financial loss from the collective sale.”
·         The reason I did not apply for an objection to STB is precisely because I will not suffer a financial loss, yet my profit from this situation will be minimal, if any, depending on the next property purchase (probably NOT a private condominium). It seems to me that home-owners in my situation are being marginalized, somehow the law is not protecting us, despite no wrong-doing nor crime committed.

Perhaps IRAS will not be able to do anything for me this time, but I sincerely hope that these points raised can be addressed by IRAS or any other agency, to benefit would-be collective sale “victims” in the future.

IRAS: We appreciate your sharing and we thank you for the feedback.  We will continue to monitor the market and review our stamp duty policies periodically.


Yours sincerely,
<Nickleman>

From: IRAS
Date: Thursday, 30 March 2017 at 11:06 AM
To: <Nickleman>
Cc: IRAS - eStamp <eStamp@iras.gov.sg>
Subject: RE: Request for exemption from Sellers' Stamp Duty

Dear Mr **

We refer to your emails of 13 and 22 March 2017 relating to Seller’s Stamp Duty (SSD). We appreciate your sharing with us your concerns in being made to bear the SSD, despite objecting to the collective sale. We hope our explanation in the following paragraphs would assist you in the understanding of stamp duty implications in buying or selling properties.

The imposition of stamp duties, namely buyer’s stamp duty (BSD), additional buyer’s stamp duty (ABSD) and SSD, is governed by Stamp Duties Act, Chapter 312, which applies to all properties depending on the types.  

As you are aware that when you buy a property, BSD is payable. ABSD will be payable depending on the residency status and property ownership profile of the buyer. SSD is payable if the sale of the property occurs within the SSD holding period. As in all property transactions, stamp duties are imposed on the sale and purchase contracts once these contracts are executed (signed). This treatment is consistently applied to all sale and purchase regardless whether collective or on individual basis. In your case, the incidence of duty had arisen from the date the collective Sale & Purchase Agreement was executed between the members of the sale committee for the collective sale and the developer.

Though you have not legally transferred your property, under the stamp duty law (especially for ABSD), you are considered to have disposed of your current property and it is excluded from your count of property owned. Hence, if the Shunfu Ville property is your only property, when you buy your next residential property, it will be considered your first count.

We wish to clarify that collective sale of private properties are driven by market forces and it is primarily a personal decision by the buyer on which type of residential property to purchase after considering the tax and non-tax implications.

We sincerely regret to inform you that there is no provision under the Stamp Duties Act to exempt SSD for dissenting owners who do not agree to the collective sale. However, you may wish to note that the collective sale is governed under the Land Titles (Strata) Act in which an application has to be made to the Strata Title Board for an Order allowing the sale of all the units and the land in the development. We understand that the Board will not approve an application if it is satisfied that the dissenting owner will suffer a financial loss if the sale proceeds for his unit are less than what he paid for the unit. Stamp duties are one of the deductions the Board will take into account in evaluating if the dissenting owner is suffering any financial loss from the collective sale.

For more information on the application for an Order for collective sale, please refer to the link below extracted for your easy reference: http://www.mnd.gov.sg/stb/typesofapplicationannex1.html

Thank you.

Warm Regards,
***Assistant Manager (PT-Valuation & Stamp Duty) | Inland Revenue Authority of Singapore
(65) 6351 **** (DID) | (65) 6351 3694 (fax) | 
http://www.iras.gov.sg  |  http://twitter.com/IRAS_SG
___________________________________________________________________
A Partner of Taxpayers in Nation-Building and Economic Development

Confidentiality: Privileged and/or confidential information may be contained in this email or its attachments. If this email has been sent to you by mistake, please notify the sender and delete it immediately. The retention or communication of this email’s contents or its attachments to an unauthorised person is prohibited and may be an offence under the Official Secrets Act (Cap 213).

From: <Nickleman>
Sent: Wednesday, 22 March, 2017 11:07 AM
To: IRAS - eStamp <eStamp@iras.gov.sg>
Subject: Re: Request for exemption from Sellers' Stamp Duty

Dear Sir/Mdm,

Since I have yet to receive a response, I would like to add on to my points below.

As I learnt from Shunfu Ville’s case, a collective sale exercise, from conception to legally complete, could be a very fast process. It could take significantly less than 2 years, a lot shorter than the maximum period of the SSD (even though now is reduced to 3 years). As such, any potential buyer has no way to be 100% sure that he is not liable for SSD (in the event of an enbloc), when buying a private condominium (maybe except for a newly launched condominium).

The decision to buy HDB, private condo, or landed property, depends on so many factors and is a personal decision for many people, including myself, where I have to consider the needs of my mother, wife and three children, besides my own and the financial burden.
The likely scenario after Shunfu Ville is that I will buy another private condominium. But how can I prevent the same thing from happening again? It seems like there is no way. What is IRAS’s advise for potential home-buyers?

Perhaps the only way is really just to avoid buying a condo. But I do not understand why condominiums are targeted in this way. Could IRAS please advise?

Yours Sincerely,
<Nickleman>
NRIC: ******

From: <Nickleman>
Date: Monday, 13 March 2017 at 11:14 AM
To: "estamp@iras.gov.sg" <estamp@iras.gov.sg>
Subject: Request for exemption from Sellers' Stamp Duty

Dear Sir/Mdm,

I am writing here to state my dissatisfaction at being subjected to SSD due to the ongoing sale of Shunfu Ville estate.
I was taxed at a rate of 4% as my length of ownership was 3-4 years at the time that Qingjian Realty won the tender and exercised their option to purchase.

Firstly, I question the rationale of why the legal completion date is not used instead of the current used ones.
According to your website, these are:
1.    Date of exercise of Option to Purchase by the buyer
2.    Date of Sale & Purchase Agreement signed by the buyer
3.    Date of transfer where (1) and (2) are not available nor applicable
My little understanding of the law is that before legal completion, the property is still legally mine. Why am I taxed for a property that is still legally mine, 12 months before it is legally sold?

Secondly, I wonder if this rule actually caters to collective sale exercises. 
The situation between an enbloc exercise and an individual sale in the open market is vastly different.
An open market sale is straightforward enough: I sell, I buy, I pay SSD.
An enbloc exercise: I pay SSD, I sell, I buy.

In this case, the period between paying SSD and buying another property is going to be about 12 months. There is considerable loss of bank interest on the SSD amount. Why am I being penalised additionally?

It is my belief that this rule has neglected the minority of home-owners, first time home-owners like me, who bought into an aging estate.
In the case of Shunfu Ville, there are a handle of owners who, like me, were caught by surprise by the collective sale and being subjected to SSD.
I believe this group of owners are being unintentionally subjected to SSD. At least I know I am.

Thirdly, I am neither a property speculator nor investor. I have only one property, which is for mine and my family’s residence. We have been staying here since early 2013, way before any collective sale discussion even started. I certainly did not expect any collective sale exercise to start so soon, otherwise I wouldn’t have spent more than $60,000 on renovations alone.
I did not sign the collective sales agreement and I did not support the sale from start till now.

My final point of dissatisfaction, is with the recently announced easing of the SSD rules.
Since the announcements, the stocks of local property developers have seen its share prices shoot up. Many analysts are now predicting that home prices will stabilise, and even rise.
This is putting me at another disadvantage as I have yet to purchase a replacement property (as we await legal completion of Shunfu Ville).

The changes to SSD also do not benefit me directly since I’m not a property investor. I’m not looking to keep selling my property every 5 years, let alone 3.

I sincerely hope that IRAS can look into the various points above, and exempt my Shunfu Ville property from SSD.
That sum of money is greatly needed in my search for a replacement property for my wife, three kids and my mother (who is recently diagnosed with mild coronary heart disease).

Yours Sincerely,
<Nickleman>
NRIC: *******

Comments

  1. Thank you for sharing this information. It has helped me to know more about
    how to buy property

    ReplyDelete
  2. The law says affected Seller pays SSD. But who is the Seller. The Order says majority owners sell ALL units. This means majority owners are tge sellers. Minority owners are not sellers and should NOT have to pay SSD

    ReplyDelete
  3. Hi Dear,

    I like Your Blog Very Much..I see Daily Your Blog ,is A Very Useful For me.

    Looking for freehold & new launch condo for sale in Singapore? Condo for sale SingaporeYou can get the best executive condo with affordable prices at Developerprojects.co.


    Visit Here - https://developerprojects.co/

    ReplyDelete
  4. I think IRAS was wrong to collext SSD from Nick. Cos Nick is objector. Nick is not the Seller. If you need help to get refund from IRAS, contact me at driktn@yahoo.com

    ReplyDelete
  5. Singapore property prices Real estate listings in Singapore - Looking to buy property in Singapore? Search the latest listings for real estate & property for sale in Singapore. Find your perfect property with Affinity-oxleyholdings.com.


    ReplyDelete

Post a Comment

Popular posts from this blog

First Post

[Seller Stamp Duty Episode] IRAS Feedback After Meeting My MP