Inheriting a property might seem like you’re inheriting a property for ‘free’. However, the truth is that property inheritance isn’t always a straightforward affair; in some situations, it may even work against you.
If you’ve just inherited a property, you may be wondering if you need to pay inheritance tax, stamp duties, or property tax in Singapore. You may also wonder if you’re even allowed to inherit the property in the first place.
In this article, we’ll go through the things you need to know when inheriting a property in Singapore.
Do you need to pay inheritance tax in Singapore?
Also known as estate duty, the inheritance tax is charged on the total market value of a person’s assets at the time of the person’s death. This includes both movable (jewellery, cars, stock shares, electronic devices, etc.) and immovable assets (property, bank accounts, etc.).
However, the inheritance tax was abolished on 15 February 2008. This means that don’t have to pay inheritance tax if the benefactor had passed away on or after 15 February 2008.
Do you need to pay stamp duties on inherited property?
You don’t need to pay stamp duties when inheriting a property as long as the inherited property is a residential property and inherited via a will or under the Intestate Succession Act (if there’s no will). This includes Additional Buyer’s Stamp Duty (ABSD), even if you own more than one property.
That said, you’ll be subjected to Seller’s Stamp Duty (SSD) if you sell the inherited property within three years of acquiring it. The amount of SSD payable ranges from 4 to 12%, depending on when you sold it.
Do you need to pay property tax and maintenance fees?
When you inherit a private condominium, you’ll need to take over the property’s maintenance fees. For HDB properties, this will be in the form of Service & Conservancy Charges (S&CC).
While S&CC fees are manageable, condo management fees are known to be expensive.
Most condos have a monthly maintenance fee of S$300 to S$500 per month, and high-end condos can reach S$1,000 and above. The condo’s management or Management Corporation Strata Title (MCST) will also charge you interest for any unpaid maintenance fees, which can be as high as 10% to 15% per annum.
If you’re not used to paying high maintenance fees every month, this could be a factor worth considering when inheriting a private condo.
Aside from maintenance fees, you’ll also need to pay property tax on the inherited property. Property tax is calculated by multiplying the property’s Annual Value (AV) with the prevailing tax rate.
As Singapore has a progressive residential property tax system, higher-value properties will have higher tax rates. The property tax rate is also determined by whether the property is owner-occupied or non-owner-occupied, with the latter commanding a higher property tax.
Remember also that as part of the ‘wealth tax’ announcement in Budget 2022, property taxes for both owner-occupied and non-owner-occupied properties will go up to 6% to 32% and 12% to 36% respectively from 2024 onwards.
Do you need to take over the property’s remaining mortgage?
If the deceased was the sole borrower and the property has an outstanding mortgage, then you’re not legally liable for the mortgage.
What will happen is that the executor or administrator will try to pay off the mortgage by selling off the property.
If there are any remaining proceeds from the sale, the executor will distribute them to the listed beneficiaries in the deceased’s will, or according to the Intestate Succession Act if there’s no will.
However, if you live in the same property, this means that you’ll lose the home and you’ll need to find an alternative accommodation.
On the other hand, if you or another family member are the joint owners, then the joint owner will be responsible for the mortgage.
But you can’t just take on the mortgage automatically because Total Debt Servicing Ratio (TDSR) will apply when inheriting a home, and banks will use this to assess whether you have the income capability to take over the home loan.
On the other hand, if you choose not to take over the home loan, you’ll either need to sell the property, or the bank will auction the property for sale.
For example, if a widowed homemaker is the beneficiary of the property, but doesn’t have a monthly income to service the home loan, she will not be able to inherit the property.
That said, if the inherited property is an HDB flat and the deceased had used his/her CPF savings to service the monthly home loan repayments, the home will be automatically insured under the Home Protection Scheme (HPS).
Under HPS, the CPF board will pay off the outstanding home loan after the owner has passed on, ensuring that the beneficiary won’t inherit the home loan.
In similar fashion, the Mortgage Reducing Term Assurance (MRTA) works the same way for private properties; except that instead of CPF, the insurance company will be the one paying off the outstanding home loan.
However, unlike HPS, MRTA isn’t compulsory for private properties. If the policy owner isn’t insured and there’s an outstanding home loan, you must ensure that you can take on the home loan before you inherit the property.
Having home insurance protection is important if you want to prevent your loved ones from inheriting the home loan should something unfortunate happen to you. We recommend purchasing a home insurance, which you find on our site.
Even so, you may not be able to keep the property
That’s right, depending on the type of inherited property and the property that you own, you may be restricted to keep the property that you’ve inherited.
Can you inherit an HDB flat if you own an HDB flat?
HDB rules don’t allow you to own more than one HDB flat at the same time, so you can’t own two HDB flats.
Therefore, if you have an existing HDB flat and the inherited property is also an HDB flat, you have no choice but to sell one of the flats within six months.
That said, you can make an appeal to HDB for more time if you’re struggling to sell your flat. HDB is usually lenient just as long as you can prove that you’re making an effort to sell.
Remember that you also can’t inherit an HDB flat if you don’t fulfil HDB’s various eligibility conditions, namely the requirements on citizenship, age, and family nucleus. For instance, if you’re single, you must be 35 years and above to inherit the flat.
Can you inherit an HDB flat if you’re a private property owner?
Inheriting an HDB flat is probably the most common scenario faced by Singaporeans.
If you’re a private property owner and you’ve inherited an HDB flat, whether or not you can keep the HDB flat will depend on when the inherited HDB flat was purchased:
- If the flat was purchased before 30 August 2010 and not bought with HDB grants, then you can keep both properties
- However, if the flat was purchased after 30 August 2010, or was purchased with HDB grants, then you must decide between selling the private property and the HDB flat
As with the terms mentioned above, you can only keep both properties if you’re a Singapore Citizen; if you’re a Singapore PR, you can only keep one of the properties.
Also, to keep both properties, you must fulfil the MOP for the HDB flat. In other words, you and your family must live in the HDB flat and not the private property. You also can’t rent out the flat.
If you choose to sell the inherited flat and keep the private property, you must sell the flat within six months if the MOP has been met. If the MOP isn’t met, then you must contact HDB for help.
On the flip side, if you choose to sell the private property and keep the flat, you must live in the flat and sell the private property within six months.
Can you inherit a private property if you own an HDB flat?
On the other hand, if you own an HDB and inherit a private property, you’re only allowed to keep both properties under two conditions:
- You’ve served the Minimum Occupancy Period (MOP) of your flat; and
- You must meet HDB’s eligibility requirements (must be a Singaporean, be a related family member, etc.)
If you don’t meet the conditions above, you’ll need to sell one of the properties.
Should you do decide to keep both properties, remember that the next property purchase will count as your third; the next property that you buy will be levied with 25% ABSD.
(If you’re a Singapore PR, you can’t own both properties and must sell the private property within six months of acquiring the private property, regardless of whether you’ve served the MOP).
Additionally, non-Singapore Citizens who inherit a landed property must also get approval from the Singapore Land Authority (SLA). The reason is that foreigners (including Singapore PRs), aren’t allowed to own landed homes in Singapore (apart from those in Sentosa Cove).
However, you may stand a higher chance of approval if you’ve been a Singapore PR for at least five years and have made ‘exceptional economic contributions to Singapore’.
Inheriting a property could restrict your property ownership in the future
Even if you don’t have to pay stamp duty when you inherit a property, remember that it still counts towards the number of properties that you own. This could affect your property ownership in the future.
For example, if you’re a Singaporean and the inherited property is your first property, you need to pay 17% ABSD if you’re buying a second property, and 25% ABSD for third or subsequent properties.
You also can’t apply for a new HDB flat (BTO flat, SBF, Open Booking of Flats) if you own a private property within 30 months before applying for the flat.
Lastly, if you inherit a private property but plan to buy a resale flat, you need to sell the private property six months before you buy the resale flat.
Read these next:
Joint Tenancy vs Tenancy-In-Common: Which Should You Property Owners Choose?
The Real Cost: Will Writing — How Much It Costs, Where To Go, And more
A Guide To Leaving A Legacy In Singapore
Stamp Duty: A Summary For Property Buyers & Sellers In Singapore
9 Things To Do With Your Inheritance Money In Singapore
By Kang Yen Joon
Before joining SingSaver, I had poor financial literacy. These days, I try to maximise my money and publish a few posts every week* on personal finance to help you manage your money better.
*I mean, I’ll try