3-Steps Guide to Own Shophouse in Singapore
If you’re considering purchasing a Commercial Shophouse in Singapore, you may want to know more about the administrative details involved in the process. In this step-by-step guide, we’ll explain how to buy a shophouse and highlight some important considerations.
Step 1: Set up an Investment Holding Company to Buy the Shophouse
Setting up an investment holding company has several benefits when purchasing a shophouse in Singapore. It offers flexibility in ownership structure and can hold multiple investment instruments. This means that you may get multiple investors on board as shareholders. An investment holding company provides limited liability, and personal assets will not be liable since the company is a separate legal entity. Using this mode of entry is foreigner-friendly, and corporate tax in Singapore stands at a competitive 17%. This vehicle can be used to consolidate and optimize your tax obligations, even if you have subsidiary businesses or assets overseas. It is important to note that ABSD (Additional Buyer’s Stamp Duty) doesn’t apply to commercial shophouses. However, shophouses with residential components will have an ABSD on the value of the residential component.
Step 2: Register for GST
The next consideration is whether to set up a GST or non-GST registered company. Companies in Singapore with a turnover of greater than $1 million are required to register for GST. While commercial or industrial properties are not subject to ABSD, they might be subjected to GST, depending on if the seller is a GST registered company. If you are buying a commercial property from a GST registered company, you will need to pay GST on your purchase price. However, if you are buying using a GST registered company, you may claim back that amount. Instead, if it were a non-GST company buying it, you would have to pay this amount. If you are a non-GST registered company, it is illegal to collect GST as you are not an approved agent of the government to do so. This decision will impact subsequent commercial or industrial property moves you intend to make, so it’s important to take a long-term stance when deciding.
Step 3: Work with Professionals
It’s important to work with professionals such as real estate consultants, lawyers, and accountants when purchasing a shophouse in Singapore. They can help with the necessary paperwork, conduct due diligence, and ensure that all regulatory requirements are met. They can also advise on the legal and tax implications of the purchase and provide guidance on financing options.
In conclusion, this 3-steps guide provides a better understanding of the administrative details involved in purchasing a commercial shophouse in Singapore. By setting up an investment holding company, registering for GST, and working with a professional, you can ensure a smooth and successful transaction. Shophouses continue to be an attractive investment option in Singapore due to their unique architectural features and historical significance.