IRAS has updated its GST guidance for property owners, clarifying the treatment of residential and non-residential properties and introducing rules for Options to Purchase containing nominee clauses.
Singapore’s Inland Revenue Authority of Singapore (IRAS) has updated its guidance on the GST treatment of property transactions, including the treatment of an Option to Purchase (OTP) containing a nominee clause.
The IRAS has published the GST: Guide for Property Owners and Property Holding Companies (Eleventh Edition), revising paragraph 7.10 and adding paragraphs 7.11 to 7.15 and 9.10 to 9.13. The changes clarify how GST applies where an OTP includes a nominee clause.
GST treatment of residential and non-residential properties
The sale and lease of residential properties are exempt from GST. This includes vacant residential land, residential buildings such as condominiums, detached and terrace houses and townhouses, as well as shophouses where the upper floors are approved exclusively for residential use.
Certain properties, including homes for the aged, student hostels, serviced apartments and workers’ dormitories, are also prescribed as residential properties.
The sale and lease of non-residential properties are subject to GST. These include commercial properties and prescribed non-residential buildings such as hotels, boarding houses, chalets, hospitals and nursing homes.
For mixed-use buildings, GST applies only to the portion of the sale price or rental attributable to non-residential use. An independent professional valuation report is required to support the allocation.
Furnished residential properties
The GST exemption applies to the bare residential property. Permanently attached fixtures, including built-in cabinets, kitchen and sanitary wares and wall-mounted air conditioners, are treated as part of the residential unit and remain exempt.
Loose furniture, appliances and fittings are subject to GST based on cost or open market value.
For a furnished residential property, the monthly rental value of the bare unit is calculated as 1/12 of the property’s Annual Value (AV). The taxable furniture rental is the difference between the gross monthly rental and this amount. Where gross rental is lower than 1/12 of the AV, no GST is charged on the furniture.
Similar treatment applies to serviced apartments and workers’ dormitories. While bare lodging or bed space remains exempt, furniture, utilities, service charges, housekeeping, security and laundry are taxable services.
GST registration threshold
A business must register for GST where its annual taxable supplies exceed SGD 1 million at the end of a calendar year, or where it reasonably expects its taxable supplies to exceed SGD 1 million in the next 12 months.
The sale of residential properties does not count towards the threshold because it is an exempt supply. Sales of non-residential properties are taxable and may trigger GST registration where the owner is regarded as being in the business of selling properties.
The determination considers factors such as frequency, regularity and commercial practices, while excluding disposals of capital assets.
Businesses making exempt supplies may also have GST registration obligations under the reverse charge regime where imported services or low-value goods exceed SGD 1 million in a 12-month period.
Time of supply and GST accounting
For completed property sales, GST on option fees and deposits is accounted for at the earlier of payment receipt or invoice issuance. For the remaining balance, GST is accounted for at the earliest of payment receipt, invoice issuance, legal title transfer or when the property is made available for occupation.
For properties under development, progressive payments are subject to GST at the earlier of payment receipt or invoice issuance. Once the property is made available, such as when the Temporary Occupation Permit (TOP) is issued, or transferred, GST on the remaining balance must be accounted for.
For property lettings, GST is due at the earlier of rental payment receipt or invoice issuance. Where advance invoices cover up to three years, GST is accounted for at the earlier of the rental due date or payment receipt.
OTPs containing nominee clauses
The updated guidance provides specific treatment for OTPs dated on or after 7 August 2026 that contain nominee clauses.
Where a seller of a non-residential property grants an OTP containing a nominee clause and the named purchaser subsequently allows a nominee to exercise the OTP, it must be determined whether the seller supplied the OTP to the named purchaser or directly to the nominee when the OTP was granted.
Where the named purchaser received the OTP from the seller as principal and subsequently recovers the option fee from the nominee, the recovery constitutes a taxable supply of the right to exercise the OTP. The named purchaser must therefore charge and account for GST on that supply.
Sub-sales and terminated transactions
For completed properties, a GST-registered sub-seller must account for GST on the full agreed sub-sale price.
For properties under development where no TOP has been issued, GST is charged on the excess of the sub-sale price over the remaining unpaid progressive payments due to the developer.
Where a sale is aborted, GST applies to any retained option or booking fee as a supply of an equitable interest. Additional compensatory damages retained are not subject to GST.
Contractual early termination fees are treated as non-taxable liquidated damages. However, voluntary lease surrender payments are taxable where the contract does not specify early termination terms. Double rent charged for holding over is also taxable.
Property tax and security deposits
Pro-rated property tax recovered from a buyer during a sale is treated as a non-taxable disbursement.
For leases, property tax recovered from a tenant is a taxable reimbursement for non-residential properties but remains exempt for residential leases.
Refundable security deposits are not subject to GST. However, GST applies where a deposit is used to offset outstanding rent or repair costs.
Input tax claims
GST-registered property owners can generally claim input tax on purchases, rentals, maintenance and renovations relating to non-residential properties used to make taxable supplies.
For mixed developments, input tax must be apportioned. Costs directly attributable to taxable supplies, such as commercial areas and meeting rooms, are fully claimable, subject to the applicable GST rules.
