Singapore's IRAS has ruled that gains from the sale of long-term investment properties held for at least 15 years are capital in nature and not taxable income under Section 10(1) of the Income Tax Act 1947.
The Inland Revenue Authority of Singapore (IRAS) has ruled that gains made by a Singapore-incorporated company from the sale of certain long-term investment properties are capital in nature and therefore not income subject to tax under Section 10(1) of the Income Tax Act 1947 (ITA).
The position was set out in Advance Ruling Summary No. 12/2026, published on 3 August 2026. The ruling concerned properties sold to related companies as part of an internal group restructuring.
Company A is incorporated in Singapore and carries on business in Singapore. It owned long-term strategic investment properties, which had been consistently leased out to generate rental income or used for its own purposes. Each property had been held for at least 15 years before being sold.
The company sold the Properties to other related companies as part of an internal group restructuring. It had not taken on any loans to finance the Properties, and no loans were secured by them.
Five factors considered
IRAS determined that the gains from the sales were capital in nature after considering the circumstances surrounding the Properties and their disposal.
The factors considered were:
- Intention at acquisition: Company A’s intention when it acquired the Properties.
- Use of the Properties: How the Properties had been used since acquisition, including their use to generate rental income or for the company’s own purposes.
- Holding period: Each Property had been held for at least 15 years.
- Circumstances of sale: The Properties were disposed of as part of an internal group restructuring.
- Mode of financing: Company A had not used loans to finance the Properties, and the Properties were not subject to loans secured against them.
Based on these factors, the gains from the sale of the Properties were determined to be capital in nature rather than trading income.
Section 10(1) of the ITA
The relevant legislative provision cited in the ruling is Section 10(1) of the Income Tax Act 1947. IRAS concluded that the gains therefore did not constitute income subject to tax under that provision.
The ruling also refers taxpayers to factors published on the IRAS website that the Comptroller of Income Tax considers when determining whether a trade is being carried on.
The decision highlights the relevance of the circumstances surrounding the acquisition, use, financing, holding and disposal of properties when determining whether gains from their sale are capital in nature.
