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What do you think will happen if government introduce CGT as cooling measures? Which segment of the property market will be worst hit?
What do you think will happen if government introduce CGT as cooling measures? Which segment of the property market will be worst hit?
In 1996, when the government introduced the following measures including CGT on gains from properties sold within 3 years, the entire market collapsed.
Singapore Property Measures - 15 May 1996 - Anti-speculation measures
80% financing restriction for property purchase
7,000-8,000 residential units to be released in 1997
30-month project completion period (PCP) for private developments under QC scheme
5% p.a. penalty imposition for PCP extension
stamp duty extended to buyers of all sales and sub-sales of uncompleted properties
new stamp duty on those who sell properties within 3 years
tax on gains from properties sold within 3 years of purchase.
every segment. this will only drive buyers to new launches and they will be at the mercy of developers. no one will sell unless the offer price sufficiently makes up for the loss.
all these may drive prices up even further
In 1996, when the government introduced the following measures including CGT on gains from properties sold within 3 years, the entire market collapsed.
Singapore Property Measures - 15 May 1996 - Anti-speculation measures
80% financing restriction for property purchase
7,000-8,000 residential units to be released in 1997
30-month project completion period (PCP) for private developments under QC scheme
5% p.a. penalty imposition for PCP extension
stamp duty extended to buyers of all sales and sub-sales of uncompleted properties
new stamp duty on those who sell properties within 3 years
tax on gains from properties sold within 3 years of purchase.
Those cooling measures from 96 consider very mild compared to what we have today.
Those cooling measures from 96 consider very mild compared to what we have today.
Today's interest rate is near zero with many more years of economic growth since 1996 and under supply over the last ten years have compounded to today's problem.
anyway, they still tax on those who trade properties.
Capital gain tax, in term of quantum is not as substantial as SSD
anyway, they still tax on those who trade properties.
Capital gain tax, in term of quantum is not as substantial as SSD
exactly. I think SSD is outright more brutal as compared to CGT and the property market is still going strong.
thomastansb
08-05-12, 14:32
Capital gain tax is nothing really...
I buy 1 million, sell 1.15 million. I earn about 100k, I get taxed 20k. I still earn 80k within 3 years. Why would it collapse??
With SSD in the third year, I get taxed 8% of 1.15M = 92k.
Capital gain tax is like 10% of SSD power.
Capital gain tax is nothing really...
I buy 1 million, sell 1.15 million. I earn about 100k, I get taxed 20k. I still earn 80k within 3 years. Why would it collapse??
With SSD in the third year, I get taxed 8% of 1.15M = 92k.
Capital gain tax is like 10% of SSD power.
ABSD even more powerful. pay when you buy!:tongue3:
But market still going strong:beats-me-man:
Capital gain tax is nothing really...
I buy 1 million, sell 1.15 million. I earn about 100k, I get taxed 20k. I still earn 80k within 3 years. Why would it collapse??
With SSD in the third year, I get taxed 8% of 1.15M = 92k.
Capital gain tax is like 10% of SSD power.
For Capital Gain Tax, the amount gain is added to your taxable income for the year and that may put you on a much higher tax bracket. It is not base on a straight percentage of the gain.
Condo Kaiser
08-05-12, 15:09
For Capital Gain Tax, the amount gain is added to your taxable income for the year and that may put you on a much higher tax bracket. It is not base on a straight percentage of the gain.
Still cannot fight SSD la....
Still cannot fight SSD la....
That depend on which tax bracket you are in. If your taxable income is say 20K, you pay no tax all. However, due to CGT of say 300K, you tax bracket is now at 20% meaning that you need to pay $64,000 for that year. Your normal 20K taxable income now also attract 20% tax.
CGT in additional to SSD can be quite an effective measure.
Condo Kaiser
08-05-12, 15:43
That depend on which tax bracket you are in. If your taxable income is say 20K, you pay no tax all. However, due to CGT of say 300K, you tax bracket is now at 20% meaning that you need to pay $64,000 for that year. Your normal 20K taxable income now also attract 20% tax.
CGT in additional to SSD can be quite an effective measure.
this only covers a small proportion of property investors. Even then, the diffence is 64k for someone who earn less than 20k per year.
If he get charged SSD 8% (assuming 300k gain is on a million dollar property, which is probably the most common situation) 8% of 1.3mio is 104k. Still a good 40% more than the 64k CGT.
Moreover - SSD amount grows linearly with transaction amount while tax rate flattens once u cross a certain treshhold.. I reckon once the quantum crosses 5mio... no way CGT will match the intensity of SSD
:2cents:
this only covers a small proportion of property investors. Even then, the diffence is 64k for someone who earn less than 20k per year.
If he get charged SSD 8% (assuming 300k gain is on a million dollar property, which is probably the most common situation) 8% of 1.3mio is 104k. Still a good 40% more than the 64k CGT.
Moreover - SSD amount grows linearly with transaction amount while tax rate flattens once u cross a certain treshhold.. I reckon once the quantum crosses 5mio... no way CGT will match the intensity of SSD
:2cents:
Not saying CGT will match the intensity of SSD. CGT will have a great effect on your taxable income. As such, in 1996, besides SSD, the government also introduced CGT to cool the property market.
If you are at 10% tax bracket (about $100,000 in taxable income), you pay about $10,000 in tax..
However, due to CGT, your taxable income is now $400K and you pay $80,000 in tax instead of $10,000.
The point here is that due to CGT, your tax bracket is now at 20% instead of 10% (for $100k) or 0% for ($20K)
Condo Kaiser
08-05-12, 16:20
Not saying CGT will match the intensity of SSD. CGT will have a great effect on your taxable income. As such, in 1996, besides SSD, the government also introduced CGT to cool the property market.
If you are at 10% tax bracket (about $100,000 in taxable income), you pay about $10,000 in tax..
However, due to CGT, your taxable income is now $400K and you pay $80,000 in tax instead of $10,000.
The point here is that due to CGT, your tax bracket is now at 20% instead of 10% (for $100k) or 0% for ($20K)
Taxes not calculated on the entire amount leh... for the first 320k u earn. flat rate 42,350 taxes to pay and anything above that u pay 20%.
No matter how u look at it, SSD is worse than CGT....
Taxes not calculated on the entire amount leh... for the first 320k u earn. flat rate 42,350 taxes to pay and anything above that u pay 20%.
No matter how u look at it, SSD is worse than CGT....
If after four years?
Condo Kaiser
08-05-12, 16:26
If after four years?
Haha then of cos no SSD is better than CGT la.. even if CGT only $50...
History has shown us no way singapore govt will impose CGT for prolonged period. Only a short term measure. shock and awe...
Taxes not calculated on the entire amount leh... for the first 320k u earn. flat rate 42,350 taxes to pay and anything above that u pay 20%.
No matter how u look at it, SSD is worse than CGT....
You need to look at YA 2012 rates.
Condo Kaiser
08-05-12, 16:44
You need to look at YA 2012 rates.
http://www.iras.gov.sg/irasHome/page04.aspx?id=1190
Condo Kaiser
08-05-12, 16:47
are u saying if i am earning 319k now and i pay around 42k tax based on IRAS numbers... in the event my company pay me 1k more for some one off bonus... i end up paying 20% on all 320k?
Then who in the right frame of mind will take the 1k? end up paying 64k -42k = 22,000 more in taxes?
Seriously... i a bit tired already....
how will CGT affect company or real estate funds?
If you are at 10% tax bracket (about $100,000 in taxable income), you pay about $10,000 in tax..
However, due to CGT, your taxable income is now $400K and you pay $80,000 in tax instead of $10,000.
The point here is that due to CGT, your tax bracket is now at 20% instead of 10% (for $100k) or 0% for ($20K)
Ur logic is wrong. :tsk-tsk:
Condo Kaiser is right.
With or without CGT, ur income of first 100k will always pay the same rate. CGT doesn't change anything what you have paid for this 100k.
Ur logic is wrong. :tsk-tsk:
Condo Kaiser is right.
With or without CGT, ur income of first 100k will always pay the same rate. CGT doesn't change anything what you have paid for this 100k.
Yes! Kaiser is right. However, CGT will bring you to the higher tax bracket since your taxable income is increased by the gain amount especially so if the gain amount is large. Sorry for the confusion on the numbers.
80% loan to value is a dream come true for most now. a lot of people are face with 60% which is far more brutal.
80% loan to value is a dream come true for most now. a lot of people are face with 60% which is far more brutal.
60% LTV is a very good measure. It protects our country from having subprime crisis. However, it indirectly promotes shoebox as an investment. Expats will have a choice of paying lesser rental in exchange for a smaller living space.
First loan still at 80%
Condo Kaiser
09-05-12, 13:24
Yes! Kaiser is right. However, CGT will bring you to the higher tax bracket since your taxable income is increased by the gain amount especially so if the gain amount is large. Sorry for the confusion on the numbers.
After one night of rest, i now have the energy to reply. You are still confused with the concept of tiered taxes....
It DOES NOT matter how much capital gain u have made... It makes no difference to the amount of taxes you have paid on other source of income...
illustration - assuming only single source of income from day job
Day job - 200k pa income
sold property in 2012 for gain of 300k
total taxable income is 500k - which equals $42,350 + (500,000 - 320,000)*20% = $78,350 of taxes payable
to break down the above number in terms of amount contributed from each source -
taxes paid on 200k day job income = 20,750
taxes paid on 300k gain = 21,600+(300,000-120,000)*20% = 57,600
total is $78,350
Hope that clears things up for you mate...........
After one night of rest, i now have the energy to reply. You are still confused with the concept of tiered taxes....
It DOES NOT matter how much capital gain u have made... It makes no difference to the amount of taxes you have paid on other source of income...
illustration - assuming only single source of income from day job
Day job - 200k pa income
sold property in 2012 for gain of 300k
total taxable income is 500k - which equals $42,350 + (500,000 - 320,000)*20% = $78,350 of taxes payable
to break down the above number in terms of amount contributed from each source -
taxes paid on 200k day job income = 20,750
taxes paid on 300k gain = 21,600+(300,000-120,000)*20% = 57,600
total is $78,350
Hope that clears things up for you mate...........
Thanks Kaiser! I probably need two-night rest to get it right.
So for a $1m property with a gain of 300k would be equivalent to paying 5.76% of additional tax.
thomastansb
09-05-12, 14:04
I already assume the worst case scenario - 20% income tax. How high you want?
For Capital Gain Tax, the amount gain is added to your taxable income for the year and that may put you on a much higher tax bracket. It is not base on a straight percentage of the gain.
thomastansb
09-05-12, 14:07
Ya, 4k is a lot to someone who made 240k profit? I still don't get your logic.
That depend on which tax bracket you are in. If your taxable income is say 20K, you pay no tax all. However, due to CGT of say 300K, you tax bracket is now at 20% meaning that you need to pay $64,000 for that year. Your normal 20K taxable income now also attract 20% tax.
CGT in additional to SSD can be quite an effective measure.
Condo Kaiser
09-05-12, 14:47
Thanks Kaiser! I probably need two-night rest to get it right.
So for a $1m property with a gain of 300k would be equivalent to paying 5.76% of additional tax.
not exactly, only in the illustraion i assumed.
If that guy is already on 500k pa income... any capital gain tax he attracts will automatically be based on 20%.. because any amount above 320k is 20%
so total income is 500k+300k = 800k
total tax is 42,350+(800k-320k)*20% = $138,350
tax from income = 42,350+(500k-320k)*20% = 78,350
tax from CGT = 300k*20% = 60k
so in this case if you die die want to express CGT as a function of your property then it's 6% (60k/1mio)
but really no point to think of CGT as an independent item, just need to know total income vs total tax
Thanks Kaiser! I probably need two-night rest to get it right.
I hope you do think about it. What Condo Kaiser and Thomastansb said are very true. CGT compared to today's SSD is nothing. (imagine a retiree with no income and only pty investments)
And you missed one of the most draconian measures in 1996:
NO SGD loan for foreigners!
Only ONE SGD loan for PRs!
What x% ABSD/ y% LTV! Foreigner/PR simply couldn't buy at all ! That was really like handbrake.
phantom_opera
09-05-12, 16:45
Yes yes, I am willing to pay 3% ABSD or CGT rather than get hit by 4y SSD ...
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