Aellan Choo Real Estate Services

Commercial Property – Remember these 3 points

invest in commercial

Introduction

Thinking about investing in property? While many people focus on houses and apartments, there’s another option worth considering: commercial properties. These are places where businesses operate, like offices, shops, or warehouses. Let’s take a closer look at 3 things we should know about commercial properties.

Goods and Service Tax (GST)

Buying a commercial property is a bit different from buying a home. One key thing to know is the Goods and Service Tax (GST). When you buy a commercial property, you usually have to pay 8% extra in GST on top of the price. This depends on the profile of the seller. For example, the seller is a developer or a company that is GST registered.

However, if you own a GST registered company and buys the commercial property under this entity, you would be able to claim back the GST on the purchase. Also, if you plan to rent out the commercial or industrial space, GST would be chargeable on the rental collected.

A Nice Perk: No Extra Tax! (NO ABSD)

Here’s some good news: when you buy a second home in Singapore, you have to pay an extra tax called Additional Buyer’s Stamp Duty (ABSD). But guess what? If you’re buying a commercial property, you don’t need to pay this tax. This can save you a lot of money and make investing in commercial properties even more attractive. In summary, ABSD DOES NOT APPLY at all to anyone when buying commercial properties. 

Selling with Freedom: No SSD Period!

When it comes to selling, commercial property owners have more freedom than residential property owners. You see, if you sell a residential property within three years from purchase date, you have to pay something called Seller’s Stamp Duty (SSD). But if you have a commercial property, you don’t need to worry about this. You can sell it whenever you want without incurring the SSD.

Take note, do not confuse Commercial Property with Industrial Property.

Industry property are subjected to SSD period.

  • Sell within 1st year – 15%
  • Sell after 1st year but within 2 years – 10%
  • Sell after 2nd year but within 3 years – 5%

Conclusion

Remember, the world of property is always changing. The value of commercial properties can go up and down because of many things. Supply and demand, or how many people want to rent or buy a place, can change the price. It’s like a wave in the ocean – sometimes it’s high, and other times it’s low. So, if you’re thinking about investing in commercial properties, make sure you’re ready for the ups and downs.

In the end, investing in commercial properties can be a smart move. They offer different rules and advantages compared to residential properties. Just like any investment, there’s some risk involved. But with the right knowledge and planning, you could see your money grow. If you’re curious about commercial property investing, don’t hesitate to reach out. I am here to help you make the best choices for your investment journey.

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