The clarification of the four-year period which MOF says is meant to provide reassurance to property owners - has sent a wave of jtters through the property market just as it is starting to pick up. Overall, one of the main gripes is that the four-year period seems arbitrary. In the first place,for new HDB flats, you can't sell until five years later. For resale, it's one year. So how did they come up with four years for this rule ? Specifically, how IRAS could deem one a "trader" which means that he relies on property transactions for income is up to IRAS to decide.
Whether or not a property seller is taxed on his profit is ultimately up to IRAS.
The tax agency does nto require individuals to alert it when they sell their properties. IRAS will use its own yardsticks such as the circumstances leading to the sales, how long the investor has held the disposed property and how frequently he has been selling properties in the past.
Take an example to show the implication of the tax consequences if IRAS decides that he should be taxed. If he earns an annual income of $100,000 and he has made a gain of $300,000 on selling his properties, his total assessable income for the year will now jump to $400,000
His income tax will aso soar by $51,600 - from $7,000 to $58,000 The surge in his income has pushed him into a higher tax bracket, from 14% to 20%
In Singapore, individuals do not pay tax on the 1st $20,000.
Just take a look at the tax rate :
1) 3.5% on the next $10,000
2) 5.5.% on the following $10,000
3) 8.5% on the income above $40,000
4) 14% on the income above $80,000
5) 20% on the income over $320,000
Above info extracted from Sunday Times - Home #7 - 12 July 2009
Care to share your view on this tax issue ? We hope to hear from you.
