4 Things to Consider Before Buying Private Property for the First Time

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Are you thinking of buying your first private property? Perhaps you and your partner have saved up and are ready to build a home in a new condo. If you’re nodding along, we’ve got good news for you. 

Keen to get a piece of that pie? Here’s a list of things to consider before you enter the glitzy fast lane that is Singapore’s private market.

1. Additional Buyer’s Stamp Duty

Loathed by second-time home buyers (and for good reason), the ABSD rates increased to 17% after the 2021 property cooling measures kicked into full gear. But how does this impact first-time private homeowners exactly? You’ll still have to fork out ABSD temporarily, as the amount will be refunded to you once you’ve sold your previous property within the 6-month window.

New laws from 9 May, 2022 with regards to residential properties transferred into a living trust:

Additional Buyer’s Stamp Duty (ABSD) of 35% will now apply on any transfer of residential property into a living trust. ABSD will be payable even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust.

So this new change closes a loophole. This ABSD (Trust) is to be paid upfront when the transfer is made.

2. Loan-To-Value

Another casualty to government-enacted property cooling measures are the LTV rates which have been lowered from 80% to 75% (if this is your first bank home loan or you’ve paid off your existing home loan). Home buyers now have less wiggle room in terms of borrowing money from the bank to finance their home. A drop in the LTV rate also means you’ll need to pay a higher down payment which is payable via cash or CPF.

3. Total Debt Servicing Ratio

The TDSR is meant to work in the best interest of home buyers from over-committing to a mortgage that they otherwise would not be able to afford. As such, you can only allocate a maximum of 55% of your monthly income to servicing your monthly loan payments. 

4. Property Tax

If you’re thinking of owning a private home with the intention to physically live in it after purchasing, we’ve got good news.  According to IRAS, you’re able to find the tax rate of your property by checking out their e-Service.

During the Singapore Budget on February 18, 2022, the government announced that the Property taxes rates for both owner-occupied and non-owner-occupied residential properties will be revised in 2 steps starting from 2023.

Rates for owner-occupied homes with an annual value in excess of $30,000 will be raised – ranging from 5 to 23 percent in 2023, to 6 to 32 percent in 2024.

For non-owner-occupied homes, which includes investment properties – taxes will be hiked across the board: from the current 10-20 percent, to 11-27 percent in 2023 and 12-36 percent in 2024.

But hey, it’s not all doom and gloom in the private market. Despite property cooling measures trying its best to deter buyers from the ever-hot private property market, experts are predicting a bustling buyer’s market for private property, as the demand for last year’s launches such as Affinity at Serangoon is still going strong, comprising a huge chunk of private property sales in January 2019. Will you be one of those standing in the line to get a peek of the buzzworthy sales gallery?

Attention all private property seekers! Ohmyhome is now your touch point to the best projects. We work together with the most established property developers in Singapore to present to you unbiased first-hand information, score invitations to VIP previews and get project catalogues along with exclusive discounts. 

Sources: IRAS

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