The issue of tax on inherited property

Singapore residential properties that are inherited will not attract Buyer's Stamp Duty

Reader M Lee wrote in to askST to say that she co-owns a property with her husband. Her husband is due to inherit a separate property soon. She asked: "Will the inherited property attract Additional Buyer's Stamp Duty (ABSD) once the probate is done?

"If it attracts ABSD, as it is my husband's second property, does it help to sell off our first property? What can we do to avoid the additional taxes?

"Does owning overseas properties also count towards ABSD?"

Business reporter Rennie Whang answered.

Assuming the properties are all residential properties in Singapore, the property in question will neither attract Buyer's Stamp Duty nor Additional Buyer's Stamp Duty, said Ms Jennifer Chia, executive director and head of corporate real estate at TSMP Law Corporation.

But the property has to be inherited in accordance with any of the following conditions:

• A will which specifically states that the property is to be inherited by your husband;

• the Intestate Succession Act; or

• the Administration of Muslim Law Act.

However, Seller's Stamp Duty could be payable should your husband wish to transfer the inherited property in the future, depending on how soon he sells it after acquiring it, Ms Chia added.

Upon inheritance of the property, your husband will have two properties in his name. Hence, if he subsequently purchases another property without selling off either the first property or the property he inherited, the new property purchased would be considered as his third property, said Ms Sandra Han, partner in the real estate practice at RHTLaw Taylor Wessing.

Assuming your husband is a Singapore citizen, the ABSD rate of 10 per cent would then kick in for the third property.

ABSD is applicable only on residential properties in Singapore, Ms Han added. Overseas properties are not taken into account when calculating the ABSD rate to apply.

A version of this article appeared in the print edition of The Straits Times on August 06, 2016, with the headline 'The issue of tax on inherited property'. Print Edition | Subscribe