Based on the Singapore Land Authority’s (SLA) website, foreigners have no issues buying commercial property in Singapore.

According to the Residential Act, you can freely buy the following property types without seeking approval from the SLA:

• Shophouses (for commercial use)

• Industrial and commercial properties

• Hotels (registered under the provisions of the Hotels Act)

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Buying Commercial Property Through a Company

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1. Reduced Taxes

Corporate taxes are lower than personal taxes in Singapore. As such, it can make sense to buy a commercial property through a local company, if you want to reduce your tax burden.

If you buy commercial property through a company, you can claim back more money from direct and indirect expenses.

Even if you’re subject to a Goods and Services Tax (GST) of 7% when buying commercial property, you’re sometimes able to claim back the GST. This is not the case for individual buyers. Do seek the Inland Revenue Authority of Singapore (IRAS) or your company tax accountant to clarify.

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2. Transfer of Ownership

The process of transferring commercial property via an entity is easier compared to an individual owner.

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3. Exemption of Total Debt Servicing Ratio (TDSR)

Individual buyers are subject to the Total Debt Servicing Ratio (TDSR) when buying commercial property.

TDSR is expressed as a percentage and shows your total debt burden to your yearly income.

As of 2017, the maximum TDSR allowed is 60%.

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Why Commercial Property?

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1. No Additional Buyer’s Stamp Duty (ABSD)

If you buy commercial property, you’re not subject to any ABSD (which is 20% for foreigners) and that potentially saves you money.

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2. No Seller’s Stamp Duty (SSD)

Residential properties are subject to a Seller’s stamp duty. where the rates are as follows:

• Holding period up to 1 year: 12%

• 1-2 years: 8%

• 2-3 years: 4%

• More than 3 years: No SSD

A benefit of buying commercial property is that you don’t need to pay any SSD.

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3. You can claim back the Goods and Services Tax (GST)

You normally need to pay a Goods and Services Tax (GST) of 7% when buying commercial property. 

If you buy commercial property as an individual in Singapore, you have to pay GST. However, if you buy a property through a company, you can claim back the GST later depending on the seller.

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4. Low Commercial Property Prices

Commercial property units are cheaper on average compared to residential property units. The PSF prices are lower and more attractive for rental yields. 

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5. High Rental Yields

The commercial property market outperforms the residential property market in terms of rental yields. Here, rates average at around 5%, compared to 2% to 3% for residential property.

Just keep in mind that maintenance costs are higher for commercial property, something you should take into consideration.

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Commercial Property Taxes

 

Buyer’s Stamp Duty

Even if you don’t need to pay the Additional Buyer’s Stamp Duty (ABSD), a Buyer’s Stamp Duty (BSD) applies.

The rate decreases progressively, depending on how long you hold the property.

The rates are currently as follows:

• 1% of the first SGD 180.000

• 2% of the second SGD 180.000

• 3% of the remaining value

 

Annual Property Tax

A property tax is levied at 10% of the annual value. The annual value is calculated based on the yearly estimated rental income.

If you want to check your property’s annual value of the current or previous five years, you can visit IRAS’s website.

 

Capital Gains Tax

Capital gains tax is normally not charged for residential or commercial property.

You might be subject to capital gains tax, in case you “trade” or speculate on the property market. Each case is treated individually.