Buying 2nd Property

Purchase of 2nd Property

You can sell your investment house for one and use the proceeds to buy another rental property without paying capital gains tax. There are 9 things you should bear in mind when buying your second property The purchase of a second property is a difficult choice these times, given the additional stamping fees. However, there are many possibilities for investments; and a second home is a big advantage for the next age. However, before you take the big leap of buying a second property, make sure you are ready: Singapore residents are subject to the Additional Buyers Stamp Duty (ABSD) when buying properties that go beyond their first.

That is currently seven percent of the sale value or the value of the property (whichever is higher). The Permanent Residents in Singapore had already payed five percent ABSD for their first property. That will be duplicated to 10 percent for their second property. The ABSD standard 15 percent is applicable to all real estate purchased by foreign nationals.

Please be aware, however, that some aliens - such as US nationals - do not have the right to this ABSD tariff due to free Trade Acts. ABSD, together with other stamping fees, must be payed within 14 workingdays of the date of signature of the sales contract. Loan-to-value (LTV) ratios for mortgage loans are usually limited to 80 per cent  of the property value or value (whichever is lower).

That means that when you bought your first house, you could only make a down pay of 20 percent. Suppose the repayment term does not overrun 25 years, and you will not be over the age of 65 when the repayment term ends, your second home will have an LTV of only 50 percent.

25% of the property can be purchased with a mix of either currency or CPF, while an unconditional 25% must be purchased in the form of money. It is a significant amount of money, so it may not be a good idea to buy a second home until the first one is out.

When you live in an HDB property, you cannot buy a second property until you comply with the five-year MOP. Remember that if you have an Executive Condominium (EC), your EC will not be privatized until after the tenth year - before that, an EC is HDB-owned and is therefore governed by regulations such as the MOP.

Please be aware that if you already own an HDB apartment, you will not be able to buy a second one. Do you buy the second property as an initial capital expenditure or as a home (e.g. a home for your children)? It affects the amount of property taxes you must have. Self-used housing has a rate of between zero and 16 percent of the annual value (AV)*.

Leased real estate has a 10 to 20 percent rate of taxes on AI. IRAS determines the IRAS and is calculated on the basis of the annual rent that the property could earn. To buy a second property to "earn more money" is not a scheme.

They should calculate the prospective rent rate and increase in equity and the likely ROI. It should then be checked against other investments, such as loans or stocks, to see if any extra real estate assets belong in your portfolios. They should have a second property policy, taking into account considerations such as..:

Real estate choices are capital-intensive, and any decision you make can have significant monetary implications. When the second property is an initial purchase, is now the right moment to buy it? Don't be worried if the second property is to be a home. If your elderly parent needs to move out of their home and remain near you for health care purposes, do so before buying the property.

However, if the property is an asset, you should ask yourself: "Why now? "Buying real estate while the markets are at their height - as some unhappy individuals did in 2014 - means you may see little or no growth in your equity. When you expect to earn rent to make your investments profitable, you need to look at median rents in the region over the years ( don't look at a particular year, look at median rent over a five to ten year period).

When total rents fall, the return on your initial investments may not be as you expected. Isn' it the right kind of property for your purposes? When the second property is intended to generate rent, is it right for the potential renters you are aiming for? It is the nature of the property that determines the nature of the lessee you are attracting, so make sure there is a coincidence.

When the second property is a house, you should check that it meets your needs. If you are buying a home for your older parent, for example, a condominium with a long walk between the front door and their apartment can be a poor option. They may also find it unpleasant to buy an owner-occupied apartment far away from local transportation (high-end apartments often expect occupants to drive).

URA masters can also have an impact on the profitability and value of the property. Any property that is now inexpensive could see a great leap in value when a life-style lift is created around it. Otherwise, an emergency could compel you to resell one of the real estate in an unfavorable one.

Auch interessant

Mehr zum Thema