Using A Singapore Company For Commercial Property Investment
Commercial Property Investment in Singapore
Investing in Singapore’s commercial property market is looking set to be the preferred investment choice for both local and foreign investors alike as Singapore and the world start to emerge and recover from the pandemic. The commercial property market is largely untouched by the Singapore Government’s recent introduction of cooling measures, and with significant developments geopolitically and trade tensions happening regionally and globally, adding to the good image that was built from the way the pandemic was brought under control here, it is really unsurprising that Singapore has become more and more attractive as a place to be for business.
Investors can buy commercial properties in Singapore either by doing it under an individual’s name or incorporate a Singapore Company and then using that to buy the property. There are some advantages to using a Singapore Company to buy and own commercial property in Singapore.
Advantages of Using a Singapore Company for Commercial Property Investment
Here are some important advantages of using a Singapore Company for Commercial Property ownership :
The GST Issue
Goods and Services Tax or GST may be applicable depending on the profile of the seller. If the seller of the commercial property is a GST Registered Company, then GST would be applicable for the purchase. If this is the case, then a 7% GST will be added to the agreed price of the property.
If the buyer is buying the commercial property under a GST Registered Company, then the buyer would be able to claim back the GST paid. If the buyer is doing this under an individual’s name, or a non-GST Registered Company, then the buyer would not be able to claim back this GST paid. Hence depending on the circumstances, incorporating a Singapore Company and registering the Singapore Company for GST can work well for the purpose.
Lower Income Tax
When there is rental income from the Commercial Property, and if the buyer is an individual, and especially when they are from higher income brackets, personal income tax rates are higher than the corporate tax rates.
In addition, a company can have more claims on direct and indirect expenses as compared to an individual, resulting in higher tax relief.
There is also partial tax exemptions available to Singapore Companies since 2008 on normal chargeable income of up to S$300,000.
| Chargeable Income | Exemption % | Exempted Amount |
|---|---|---|
| 1st S$10,000 | 75 | S$7,500 |
| Next S$290,000 | 50 | S$145,000 |
| Total of S$300,000 | S$152,000 |
Separate Legal Entity
Using a Singapore Company to buy and own a Commercial Property separates the legal ownership of the property, income, and expenses from the high net-worth investors’ personal finances, which can have lots of advantages in terms of personal income tax payments.
We can assist you with the incorporation of the Singapore Company and as well as assist you with the registration for GST for your Singapore Company. In addition, we can provide you with a full suite of corporate services including Accounting and GST filing requirements for your GST Registered Singapore Company every quarterly.