Buying: side by side
| Residential | Commercial | |
|---|---|---|
| The buyer | Usually a person | Usually a company |
| The first question | Is it right for me, and can I afford it? | Is the use allowed, and does the business work here? |
| GST | None | 9% if the seller is GST-registered |
| Buyer's stamp duty | Up to 6%, plus ABSD | Up to 5%; no ABSD on the non-residential part |
| Selling within 4 years | Seller's stamp duty applies | None on commercial |
| The loan | TDSR 55%, tested at an interest rate of at least 4% | TDSR 55%, tested at at least 5%; loan-to-value set by the bank |
| After signing | Move in | Fit-out, approvals and licences before opening |
Work out the buyer's stamp duty on any price with the stamp duty calculator.
Leasing: side by side
| Residential | Commercial | |
|---|---|---|
| Condition | Ready to live in | Often bare: the tenant fits out, and puts it back at the end |
| Use | Living in it | Only the use URA has approved for that unit and storey |
| Rent | A monthly figure | Base rent, service charge, sometimes turnover rent; plus GST if the landlord is registered |
| Rent-free | Rare | Common, for fitting out |
| Stamp duty | 0.4% of the total rent | The same rate; service charge counts, GST does not |
| Who signs | The tenant | A director of the tenant company |
Questions
Is a shophouse residential or commercial property?
It depends on its zoning and the approved use of each storey. Many shophouses are zoned Commercial; some are Commercial & Residential, with homes upstairs. Stamp duty and foreign ownership follow those, not the look of the building.
Do I pay ABSD on a commercial shophouse?
Not on the non-residential part. Where part of a shophouse counts as residential, ABSD applies to that part.
Can I use CPF to buy a commercial shophouse?
No. CPF cannot be used for commercial property; the equity is cash.
Sources
- IRAS, buyer's stamp duty: iras.gov.sg(bsd)
- IRAS, stamp duty on leases: iras.gov.sg
- IRAS, GST on real estate: iras.gov.sg(gst)/specific-business-sectors/real-estate
- MAS, calculating TDSR: mas.gov.sg
- URA, changing the use of your property: ura.gov.sg