Property Disposal Gain (IRAS)

[Ringo33]

Can someone explain to me under what scenario you will get taxed?


SINGAPORE: Only 201 individuals and 39 companies in Singapore have been subject to income tax on their property disposal gains in the last two years.

Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam said this in a written response to questions in Parliament from MP Lim Biow Chuan.

Mr Tharman also provided clarification on when gains from the sale of a property are taxed and when they are not.

Singapore imposes taxes on income but not on capital gains. In determining whether gains derived from the sale of a property are considered capital or income, the Inland Revenue Authority of Singapore (IRAS) considers "the actual facts and circumstances surrounding the sale."

This means that IRAS will assess the situation leading to the sale, including the holding period of the property and the frequency of such sales. IRAS will subsequently inform the taxpayers accordingly if it assesses, after its review, that the property gains are income in nature and are therefore taxable.

Before selling their properties, taxpayers can apply to IRAS for an advance ruling to ascertain whether the gains from their intended property disposal are taxable.

Meanwhile, property trading companies are taxed on their property disposal gains as trade income.

The tax treatment for property trading companies is similar to income tax on any other type of trade income. The IRAS does not track trade income by how the trade income is generated.

[Secretariat]

Can someone explain to me under what scenario you will get taxed?

This question routinely turned up whenever the market is hot.

http://www.iras.gov.sg/irasHome/page04.aspx?id=152

Hmm...201 individuals caught over the last two years. Average 8 per month, so high? :doh:

[carbuncle]

In a bull market run up across past two years, it is statistically pathetically low actually. why? its due to the SSD and other CMs.

Da man has skirted the original question quite skilfully. Original was asking past FIVE years.

I can bet you the numbers would have been drastically different.

"Mr Lim Biow Chuan: To ask the Deputy Prime Minister and Minister for Finance (a) in the last five years, how many residents in Singapore have been declared as property traders; and (b) whether they were informed in advance that they had been declared as property traders before they were taxed on their income"

[buttercarp]

Quoting the article:
"This means that IRAS will assess the situation leading to the sale, including the holding period of the property and the frequency of such sales. IRAS will subsequently inform the taxpayers accordingly if it assesses, after its review, that the property gains are income in nature and are therefore taxable."

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So we have to declare the sale and IRAS will decide for us.

[carbuncle]

Quoting the article:
"This means that IRAS will assess the situation leading to the sale, including the holding period of the property and the frequency of such sales. IRAS will subsequently inform the taxpayers accordingly if it assesses, after its review, that the property gains are income in nature and are therefore taxable."

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So we have to declare the sale and IRAS will decide for us.

I didn't even know got such thing one..... in any case its at their discretion. the funniest part is the part on checking with them before selling. totally never heard before and not mentioned anywhere in their site or policy. only "insider" will know such things.

[Secretariat]

Quoting the article:
"This means that IRAS will assess the situation leading to the sale, including the holding period of the property and the frequency of such sales. IRAS will subsequently inform the taxpayers accordingly if it assesses, after its review, that the property gains are income in nature and are therefore taxable."

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So we have to declare the sale and IRAS will decide for us.

You can ask IRAS before the sale, if it is going to be counted as a trade.

[silver023]

No fixed scenario whereby an individual will get taxed. Depends really on the circumstances surrounding each individual's case.

IRAS would use the "badges of trade" in analyzing each case:
(i) Subject Matter of the Realisation
(ii) Length of Period of Ownership and Frequency of Similar Transactions
(iii) Circumstances which were Responsible for the Realisation
(iv) Motive
(v) Financing

References:
Landmark case in Singapore: http://www.drewnapier.com/publications/Dnpub17.pdf
IRAS query on taxation of capital gains for property: http://www.iras.gov.sg/irasHome/page04.aspx?id=152

To generalize, if an individual buys and sells various properties during say 1 year (i.e. high frequency and low holding period), financed by loans, then this persons should set aside some of his/her profts for contribution to nation building.

[Tripp]

I think our bro MCM kena this before... I believe he was granted an extension - whatever that means.

[buttercarp]

According to the website provided by bro Secretariat

http://www.iras.gov.sg/irasHome/page04.aspx?id=152

Examples of the criteria are as follows:

Frequency of transactions (buying and selling of properties)
Reasons for acquiring and selling of property
Financial means to hold the property for long term
Holding period-------------------------------------------------------

I wish that IRAS could list out the specific criteria so that we will know whether or not we will be taxed when we sell our property.

[carbuncle]

I think our bro MCM kena this before... I believe he was granted an extension - whatever that means.

don't remember reading this... only his silly monthly Community Service stuff.

maybe I haven't join this forum then...

[Lovelle]

I think our bro MCM kena this before... I believe he was granted an extension - whatever that means.

yeah, saw that post. Got to answer many questionnaire