Property Developers

Property developers carry on property development activities i.e. the development of land parcels into residential, commercial and industrial properties for sale, usually prior to the completion of the properties.

A typical property development cycle includes the following stages where a property developer: 

1. Acquires a land parcel/ property for development, 
2. Obtains government approvals and financing, designs and awards the construction contracts to various contractors, and 
3. Markets the property units for sale prior to and after the completion of the development project. 

A property developer is prima facie carrying on the business of property development for sale. For tax purposes, the profits of a property development project are recognised when the project is substantially completed i.e. when the Temporary Occupation Permit (TOP) is issued.

Expenses that are directly attributable to the acquisition of land and property development activities are to be capitalised and accumulated in the Development Cost Account up to the Year of Assessment in which the TOP is issued (‘TOP YA’).

In the TOP YA, the sale proceeds due and payable in accordance with the payment schedule in the Sale and Purchase Agreement of the property units sold are taxed. The allowable development costs incurred up to that date on these units are allowed as deduction. If some property units are not sold by the TOP YA, the allowable development costs to be allowed as deduction in the TOP YA have to be apportioned.

Learn more about the taxation of property developers (PDF, 196KB).

Record Keeping

A property development company is required to keep proper records and accounts of its business transactions for submission upon IRAS’ request. Learn more about a company’s record keeping requirements.

Information Required for Each Property Development Stage

Apart from keeping proper records and accounts, a property development company is required to prepare and maintain the relevant information at each stage of the property development cycle and submit it to IRAS.

A property development company that files its Corporate Income Tax Return (Form C) should provide the relevant information upfront in its income tax computation filed together with the Form C. This will help to expedite the review and finalisation of the company’s assessment. If the relevant information is not provided together with its Form C, IRAS will write to the company to request for it.

In the case of a property development company that files Form C-S or Form C-S (Lite), it is only required to prepare and maintain the relevant information and submit it to IRAS upon request.  

Stage 1: Acquisition of Land/ Property

• Location/ address of the land/ property
• Date of purchase
• Purchase price and a breakdown of incidental expenses
• Description of the proposed development
• Name and identification number (NRIC/ FIN/ UEN, etc.) of the vendor and whether the vendor is in anyway related to the company, its directors or shareholders. If so, the company should provide details of the nature of relationship and state whether the purchase price is reflective of the market value of the land/ property as at the date of purchase
• Purpose of acquisition. If the land/ property is not acquired for development for sale, the company should inform IRAS of the intent of acquisition when filing the Corporate Income Tax Return for the YA relating to the basis period during which the land/ property was acquired and provide supporting documents to substantiate the intent upon IRAS' request. 
• Means of financing the purchase (e.g. bank loans, overdrafts)

Stage 2: Development of Property

• Description of the development with name and address of the development project
• Total number of units and floor area of units to be built
• Date of commencement of development project
• Date or expected date of TOP
• A schedule showing the development costs incurred and indicating the disallowable items 

Stage 3: Sale of Developed Property Units

• Date of TOP and Certificate of Statutory Completion (CSC)
• Computation showing the tax adjusted profit or loss on sale of developed property units as at the TOP date
• For each developed property unit sold to related parties, the company should provide:
  • Official address of the unit
  • Full name and identification number (NRIC/ FIN/ UEN, etc.) of the purchaser and nature of relationship
  • Contracted date of sale, sale price and the floor area of the unit
  • Details of whether the sale price is reflective of the market value of the property unit as at the date of sale
  • In respect of any unit sold to a director, employee and /or employee of a related entity at a discount which is over and above that given to the public, please provide the additional discount amount and confirm that it has been reported as benefits-in-kind in the respective Forms IR8A

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