Tenancy Agreement Stamp Duty Penalty Singapore: What You Need to Know
Renting a property in Singapore is a common practice, but it’s important to know the rules and regulations surrounding it. One of the most important things to consider is the tenancy agreement stamp duty. It’s a mandatory tax that must be paid by landlords and tenants when they sign a lease agreement.
Here’s everything you need to know about tenancy agreement stamp duty penalty in Singapore.
What is Tenancy Agreement Stamp Duty?
Tenancy agreement stamp duty is a tax that must be paid by landlords and tenants when they sign a lease agreement. It’s levied under the Stamp Duties Act and is required under the law. The purpose of the tax is to provide funding for the government and to ensure that all rental agreements are documented and legal.
The stamp duty is based on the annual rent and the term of the lease agreement. The rate for the stamp duty usually varies between 0.4% and 2% of the total rent over the lease period. The amount payable is calculated as follows:
Annual Rent x Lease period = Total Rent
Total Rent x Stamp Duty Rate = Stamp Duty Payable
Who Pays Tenancy Agreement Stamp Duty?
In Singapore, both the landlord and tenant are responsible for paying the tenancy agreement stamp duty. Although it’s not explicitly stated in the law, the usual practice is for the tenant to bear the cost of the stamp duty.
However, it’s important to note that the landlord may choose to bear the cost of the stamp duty as a gesture of goodwill or to attract tenants. If both parties agree to this arrangement, it must still be documented in the lease agreement.
When Do You Need to Pay Tenancy Agreement Stamp Duty?
Tenancy agreement stamp duty must be paid within 14 days of the start of the lease agreement. This means that both the landlord and tenant must ensure that the stamp duty is paid before or on the date of the lease commencement.
Failure to pay the stamp duty within the 14-day period will result in a penalty. The penalty is 4% per annum of the unpaid stamp duty for the first year and 1% per annum for each subsequent year of delay.
What Happens If You Don’t Pay Tenancy Agreement Stamp Duty?
If you fail to pay the tenancy agreement stamp duty within the 14-day period, you will be liable for the penalty. The penalty is calculated based on the total amount of the unpaid stamp duty and is payable to the Inland Revenue Authority of Singapore (IRAS).
The IRAS may also enforce legal action against you for non-payment of the stamp duty. This can include legal proceedings, fines, and imprisonment.
Conclusion
Tenancy agreement stamp duty is a mandatory tax that must be paid by landlords and tenants when they sign a lease agreement in Singapore. The amount of the stamp duty is based on the annual rent and the lease period, and failure to pay it within 14 days will result in a penalty.
It’s important for both parties to ensure that the stamp duty is paid on time to avoid any penalties or legal action. If you’re unsure about the stamp duty payable for your lease agreement, seek professional advice or consult the IRAS website.