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Frequently Asked Questions About Capital Gains From Real Estate

Explore the key aspects of capital gains in real estate. Learn how they’re calculated, their tax implications, and strategies to optimise returns in Singapore.

Capital Gains from Real Estate

Capital gains in real estate refer to the appreciation in the value of a property from the time of its acquisition to the time of its sale. It represents the financial gain you achieve when you sell a property at a price that exceeds its original purchase price, along with any associated expenses such as renovations or improvements. However, it is important to note that capital gains are only realised when the property is sold.

Singapore’s approach to capital gains in real estate is notably investor-friendly. The city-state does not levy a specific capital gains tax. However, depending on the nature and frequency of your property transactions, the tax authorities here might view your activities as a form of trade rather than investment. If this is the case, the gains may be treated as business income and may be subject to taxation.

Capital Gains on Investment Property

Capital gains for investment properties, such as residential units, refer to the profit realised when the selling price exceeds the property’s acquisition cost. This cost includes the original purchase price combined with any associated expenses, like legal fees or renovation costs. Over time, as market conditions and property developments evolve, the value of an investment property might increase, leading to potential capital gains when sold.

Capital Gains on Commercial Property

Capital gains for commercial properties are deduced by subtracting the property’s acquisition cost from its selling price. The acquisition cost includes not only the original purchase price but also various other expenses, which might be more complex in commercial scenarios. These could encompass brokerage fees, legal costs, administrative charges, and sometimes, even the costs associated with tenant improvements or fit-outs.

Although Singapore doesn’t impose capital gains tax on investment property, sellers of commercial properties should be vigilant about other potential tax obligations. For instance, depending on the entity that owns the property (individual, company, or trust), there might be different tax implications on the profit realised from the sale.

Explore Real Estate Investment Opportunities with SafeRE

SafeRE provides access to top-tier real estate investment opportunities, focusing on transparency, minimised fees, and consistent performance. Whether you’re looking to access capital gains from commercial properties or find ways to diversify your portfolio, SafeRE is here to guide and facilitate. Connect with us for more insights.