Property sales tax structure remains

The government has settled not to alter the existing income tax structure with regard to persons who put their properties for sale, an action that was accepted by industry players, which include the Real Estate Developers' Association of Singapore.

In a proposal provided for public discussion, the Ministry of Finance had proposed that the persons whose properties were sold would be sure that the profit they produced would not income tax subject if other properties were not sold in the past four years.

However, this was distinguished as an anti-speculation measure by the market, as it indicates that those who trade over one property in four years will not be excused.

Eager to suppress rumours regarding an anti-speculation drive, the MOF elucidated that the suggestion is improbable to direct to more persons being taxed. Instead, it presents clearness on whether profits will be taxed as it suggests a state that would assure no tax.

Presently, sellers of property do not pay tax on profits except when the IRAS spot them as merchant and consider the profits as an income.

MOF elect not to apply the change pursuing the latest public discussion exercise.

The proposal was provided for criticism by the Income Tax Act public discussion exercise from 22 June top 14 July.

 
Feedback state that the suggested alteration could prejudice purchase decision of property to investing in a larger property, instead of several smaller ones. This is since assurance of non-taxation would be supplied for discarding of a property in four years.

It has been determined that it is best to keep the existing structure of income tax conduct for persons who trade their properties.

A Redas spokesperson said, “We welcome the Ministry of Finance's decision not to change the current income tax framework for individuals who sell their properties.” Then add, “Redas appreciates the government's consultative approach and understanding of the industry's concern on the matter.”

The chief of tax services at KPMG, Owi Kek Hean said, “We welcome the positive news that the Ministry of Finance has listened to public feedback,” Then add, “The decision not to change the current income tax framework for individuals who sell their properties clearly demonstrates how the government takes differing views on-board in its formulation and changes proposed to Singapore tax policy.”

MOF also stated that it has recognised 85 of 113 suggestions obtained on the draft Income Tax, Bill 2009.