When it comes to renting a property in Singapore, one of the most important documents you need to know about is the tenancy agreement. This legal document outlines the terms and conditions of the tenancy between the landlord and the tenant. And if you’ve been looking for a rental property, you may have come across the term “tenancy agreement stamp duty.”
So, what exactly is tenancy agreement stamp duty, and how is it calculated in Singapore? Let’s find out.
What is tenancy agreement stamp duty?
In Singapore, tenancy agreement stamp duty is a tax levied on the agreement between the landlord and the tenant. It is a legal requirement that the agreement is stamped and the duty paid within 14 days from the date of signing.
Under the Stamp Duties Act, the stamp duty payable on a tenancy agreement is calculated based on the total rent paid over the entire lease period. The lease period is typically 2 to 3 years for residential properties and 3 to 5 years for commercial properties, although this can vary based on the agreement between the landlord and the tenant.
How is tenancy agreement stamp duty calculated?
The calculation of tenancy agreement stamp duty in Singapore is based on a tiered system. Depending on the total rent paid over the lease period, the stamp duty payable can vary.
Here’s a breakdown of how tenancy agreement stamp duty is calculated in Singapore:
• For lease periods of up to 1 year, the stamp duty payable is calculated as 0.4% of the total rent paid.
• For lease periods of between 1 and 3 years, the stamp duty payable is calculated as 0.4% of the total rent paid for the first year, and 0.2% for every subsequent year.
• For lease periods of between 3 and 4 years, the stamp duty payable is calculated as 0.4% of the total rent paid for the first year, 0.2% for the second year, and 0.2% for the third year.
• For lease periods of between 4 and 5 years, the stamp duty payable is calculated as 0.4% of the total rent paid for the first year, 0.2% for the second year, 0.2% for the third year, and 0.2% for the fourth year.
• For lease periods of 5 years or more, the stamp duty payable is calculated as 0.4% of the total rent paid for the first year, 0.2% for the second year, 0.2% for the third year, 0.2% for the fourth year, and 0.2% for every subsequent year.
For example, if the total rent payable over a two-year lease period is $24,000, the stamp duty payable would be $192 (0.4% of $24,000 for the first year, and 0.2% of $24,000 for the second year).
Conclusion
Tenancy agreement stamp duty is an important tax that must be paid when renting a property in Singapore. The calculation of tenancy agreement stamp duty is based on the total rent paid over the entire lease period. It is important to keep in mind that failure to pay the stamp duty within the required timeframe can result in penalties.
As a tenant or landlord, it is important to understand the stamp duty calculation process and ensure that the duty is paid on time. This will help avoid any legal issues and ensure a smooth tenancy agreement process.