Buying a house, either to live-in or to invest, is a big buy and you should not do it without a property purchase checklist.
A property buyers’ checklist highlights the things purchasers should check or do before and after purchasing private residential property.
You should have a property purchase checklist even if you are transferring your real estate.
- Make a legal requisition on the property
Once the property is transferred to you, you will be liable for any outstanding property tax including arrears that should have been paid by the previous owner. Thus, it is important for your lawyer to make a legal requisition to check on any outstanding property tax.
- Apportion property tax between you and the seller
If there is an outstanding tax amount, your lawyer will assist you to settle the outstanding amount with the seller. Your lawyer will also apportion the current year tax between the seller and yourself. Inland Revenue Authority of Singapore (IRAS) does not apportion property tax liabilities between the parties.
- File a Notice of Transfer to IRAS
The seller’s lawyer will file a Notice of Transfer to IRAS within one month of the sale or property transfer. For correspondence and payment, IRAS communicates with the owner who is listed first in the Notice of Transfer filed by the seller’s lawyer. If there is a preference among owners on who IRAS should correspond with, property buyers should inform their lawyer. Your lawyer will then liaise with the seller’s lawyer to ensure the Notice of Transfer is filed correctly.
Your lawyer usually performs the following tasks as part of conveyancing or the legal process of transferring ownership of property.
Check with your lawyer to find out more about the status of the tasks and this is an important part of your property purchase checklist.
Once the Notice of Transfer has been processed by IRAS, the record of ownership will be updated for property tax purposes.
- Update your address
IRAS sends the property tax bill or notice to the address listed on your identity card, or the corporate owner’s registered office address listed in the Accounting and Corporate Regulatory Authority (ACRA) records. To receive all your correspondence promptly, ensure that your address is updated.
- Receive Acknowledgement Notice on Transfer of Property
IRAS will issue an Acknowledgement Notice to inform you about the updated record of ownership. If there is any outstanding tax for your property, arrange for payment to be made.
- Automatic Application of Owner-Occupier Tax Rates
Owners who live in their homes enjoy lower property tax rates. The Acknowledgement Notice will inform you if your property has been granted the owner-occupier tax rates. If you have another residential property granted the owner-occupier tax rates, the concession will not be automatically applied. You will have to apply for the owner-occupier tax rates once you have moved in to the property.
The policy intent of owner-occupier tax rates is to encourage home ownership in Singapore. They are only applicable if owners are residing in their residential property.
The owner-occupier tax rates are progressive tax rates based on the annual value of your property. This means residential properties of higher annual value are taxed at higher rates while most owner-occupied properties (including all HDB flats) will continue to enjoy lower tax rates.
Calculate your property tax
To calculate the annual property tax payable, multiply the Annual Value (AV) of the property with the set of Property Tax Rates that applies to you. Property tax rates on owner-occupied and non-owner occupied residential properties are applied on a progressive scale.
The AV of buildings is the estimated gross annual rent of the property if it were to be rented out , excluding furniture, furnishings and maintenance fees. It is determined based on estimated market rentals of similar or comparable properties and not on the actual rental income received.
Arranging to pay your property tax should be starred in every property purchase checklist.
Generally, the seller or transferor’s lawyer will file a Notice of Transfer to IRAS within one month of the sale or property transfer. If the ownership records have not been updated, check with your lawyer if the notice of transfer has been filed to IRAS. Payment of property tax must be made within 1 month from the date of Acknowledgement Notice. When there is more than one owner, all the owners are collectively responsible for paying property tax.
Property buyers should remember that newly completed properties are taxed from the TOP date. Under the law, property tax is a charge on the property. Hence, the current owners need to pay any outstanding tax including any amount payable prior to the date of transfer of the property. This means that although you only took possession of the property on 5 Nov (date of tax liability), you are liable for the property tax for the period with effect from 8 Aug, the date of TOP.
Your lawyer would usually assist you in seeking the reimbursement of property tax from the developer. Liaise with your lawyer for the reimbursement of tax (i.e. 8 Aug to 4 Nov) from the developer, if this has not been done.
The date of your tax liability is indicated in the notice of transfer filed by the developer’s lawyer. If the information is incorrect, inform your lawyer to correct the information submitted to IRAS.
The post Property purchase checklist is a must before making that big buy appeared first on iCompareLoan.
