We refer to the letter “Fairer way to gauge stamp duty” (ST Forum, 14 Oct 2014) by Mr Aaron Chia Chun Sian.

Stamp duty is charged on the higher of the purchase price or the market value, which refers to the valuation of the property. This applies to all property types and acts as a necessary safeguard against under-payment of stamp duty or tax avoidance, whereby the buyer and seller agree on a purchase price lower than the market value to lower the stamp duty liability.  If the duty is computed solely on the purchase price, it may lead to a situation where some buyers will unfairly benefit from a lower duty compared to other buyers purchasing properties with the same market value.  

A HDB resale flat buyer would typically request a valuation of the flat to support his application for mortgage financing or the use of CPF funds, and the valuation by the professional valuer would take into account the market conditions. Hence, it would be appropriate to consider the valuation provided by the valuer for the purpose of computing stamp duty even in cases where the price paid is lower than the value determined.  

We thank Mr Aaron Chia Chun Sian for giving us the opportunity to clarify.

Kelly Wee (Ms)
Director (Corporate Communications)
Inland Revenue Authority of Singapore