As a separate legal entity, a company can purchase and hold a property. This can be either a commercial or residential property. Due to the extremely high additional buyers’ stamp duties levied on companies when they purchase residential properties, companies usually purchase commercial properties. Therefore, in this article, we will focus on a Singapore company buying and owning a Singapore commercial property. While a foreign company can own a Singapore commercial property, to simplify matters, we will refer to the case where a Singapore company is the buyer.

For starters, a company when purchasing a commercial property would be treated in the same manner as a natural person. This means that a company’s name would be on the title of the property when the sale and purchase is completed. A company being a separate legal entity can sell and purchase property.

In most cases, the motivation for purchasing a commercial property under a company versus in a person’s own name would be to claim back the Goods and Services Tax (GST). However, that is not the only motivation to do so.

Here are some reasons why using a company to purchase a commercial property might be advantageous.


For the purposes of claiming back GST from the purchase of the commercial property

If the seller of the commercial property is a company, there is a chance that that company is a GST-registered company. This would mean that the purchase of the commercial property will be subject to GST. For example, if the selling price of the property is $1,000,000, 9% GST will need to be factored into the selling price. In this case, even thought the seller listed the property for $1,000,000, the eventual price that the buyer will need to pay is $1,090,000 with $90,000 the GST payable on the purchase price of the property.

If the property is purchased under a person’s individual name, then this GST cannot be claimed back. However, if the purchaser is a GST-registered company, then as a GST-registered tax agent with the Inland Revenue Authority of Singapore (IRAS), the company can claim back this GST paid to the seller of the property as this would amount to an input tax. In this case, the company will need to fork out the $90,000 first and then claim back this input tax after the purchase is completed.

In most cases, the property is identified by an individual. This individual wants to purchase the property perhaps for his business. Then he finds out from the property agent that the seller is a GST-registered company. He is told that if the buyer is also a GST-registered company, this company can apply to “claim back” the GST paid on the purchase price of the property. The individual then looks for Corporate Service Providers (CSPs) like Raffles Corporate Services to incorporate a company and register that company as a GST agent with IRAS.

Do take note that if the buyer and eventual owner of the commercial property is a GST-registered company, if the company rents out the property, the tenant of the property will also have to pay GST on the rental of the property as rental is also covered under the ambit of goods and services. This GST will need to be paid to IRAS at least once every quarter. The company will need to remain a GST-registered company for at least two years from the date of registration before it can deregister itself as a GST agent with IRAS. After deregistration, it will no longer be allowed to collect GST on its goods and services.

In this case, the company’s GST registration is voluntary. For such companies, deregistration, or what IRAS calls voluntary cancellation of GST registration, can only be done 2 years after the voluntary registration.

When the company is no longer a GST-registered company, it will not need to collect and report GST to IRAS. If GST was being paid on its rent collected by the tenant of the commercial property, upon cancellation of GST registration, no more GST is to be charged on the rent.


Future sale can be by way of sale of the company rather than sale of property

There are certain limitations to this which we will cover in another article if this is a seller disposing of equity interests in a Property-Holding Entity (PHE) and the property that the entity is holding is a residential property. We will cover this at a later article.

If the property is the asset of the company and the company is sold, the stamp duty rate for the sale of shares is significantly lower than the stamp duty payable on the purchase of a property.

Here are the rates in question

Stamp duty rate for sale of share transfers: 0.2%

Stamp duty rate for sale of commercial property
First $180,000: 1%
Next $180,000: 2%
Above $360,000: 3%


Therefore, if the company is holding a commercial property that is worth $1 million and the company is sold for $1 million, the sale of the company will include the commercial property as the commercial property is part of the company’s assets.

The stamp duty payable for the sale of the company shares (i.e., stamp duty on transfer) is 0.2% of $1,000,000 = $2,000


If the company sells the commercial property to another buyer, this would be a sale of commercial property transaction and therefore the stamp duty payable will be:
First $180,000: 1% of $180,000 = $1,800
Next $180,000: 2% of $180,000 = $3,600
Above $360,000: 3% of $640,000 = $19,200

Stamp duty payable = $24,600


This is a huge difference of $22,600 on a $1 million commercial property. Imagine if the sale and purchase were a few million dollars.

Therefore, if there is an intention to sell the property together with the company, lower the stamp duty payable may be an attractive consideration for some buyers.


Other considerations: Purchasing the property before the company is incorporated

At times, the purchase of the property cannot wait. The property may be sold by the time the company is incorporated. Therefore, an individual can purchase the option to purchase first. However, the option should be purchased with the clause “and/ or nominee”. This allows the option to be purchased by one individual and the option can be exercised by the nominee of that individual. In essence an option is the right to purchase the property. Therefore when the purchaser purchases the option, he is purchasing the right to purchase the property. The exercise of the option is the exercise of the right to purchase the property.

Therefore, it is important for the clause “and/ or nominee” to be included in the option that that individual is purchasing.

It is also important that the option period be sufficient enough for the company to be incorporated. In most cases, the incorporation can be done by CSPs like Raffles Corporate Services within a day. However, there are instances whereby the registrar may refer the incorporation to the referral authority and the incorporation may take anywhere from a few days to even 14 days or longer. Therefore, it is important that the submission of the incorporation of the company to ACRA be done as soon as possible and as a precaution, the option period should be at least 4 weeks to facilitate any possible delays in the incorporation process.


Other considerations: Loan to Value (LTV)

If the commercial property is for the purchaser’s own use, the loan to value should typically be higher.
LTV for commercial properties for own use: 80-90%
LTV for commercial properties for investment (purchase to rent out): 70%


Other considerations: Loan criteria

If the company is a newly incorporated company, then the directors and shareholder of the company may be required by the bank to stand as guarantors. This may affect the Total Debt Servicing Ratio (TDSR) of the guarantors.


If you are looking to incorporate a company to purchase a property and require assistance, do contact us at [email protected].


Yours sincerely,

The editorial team at Raffles Corporate Services