In the last decade, Singapore has become a major hot spot for expats, and owning a home sometimes makes sense over renting because it costs less in the long run. Before you take that plunge, however, look at the costs and benefits carefully. On the plus side, owning a home lets you feel settled in, and when you look at Singapore’s low borrowing rates, strong property market and high rental prices, there’s no question about what you should do. Buying can have a negative impact, so you have to consider it carefully.
Many times, expats will live a peripatetic lifestyle, and they will move on a whim, based on their employer. The shorter the time frame, the less chances you have a recouping from the costs of buying and selling the property. You also want to avoid buying near the peak prices, and you want to sell as the prices are doing well.
Buying real estate in Singapore becomes a straightforward process for people who qualify, but be cautious of the down payment and mortgage. These aspects of owning a home will eat up your paycheck and liquid net worth fast. Normally, you want to keep housing costs to about one third of your income. If you go too much over that, it becomes a hassle fast. Because the mortgage rate in Singapore is floating and not fixed, they are subject to change. Keep a close eye on Singapore property news because what may be affordable now, might not be if there are upticks in the rates, and that will have a huge impact on what your monthly cash flow is.
Many people buy a home with the idea of saving on rental, which is a shrewd move, but you have to look at and compare all the costs of owning versus renting. For example, if you hope to later turn the property into something that makes you money, you have to look at how you are making a leveraged bet. The idea behind this is to maximize how you are investing in Singapore real estate. For example, if this home will serve as your primary residence, you could have an entitlement to US homeowner tax benefits. That means that you could deduct the mortgage interest.
Capital Gains in Singapore
Singapore does not tax the capital gains on property, but there are stamp duties for both the buyer of a home and the seller. The stamp duty amount depends on whether you are a foreign owner, citizen or permanent resident. It also will depend on whether a Free Trade Agreement exists between your country and Singapore.
The real estate market in Singapore is booming. Whether you want to have the experience of owning your own home in Singapore or you want to turn a healthy profit, you should always assess the risks before jumping in. Run the numbers and calculate the risks before making that final decision. For example, if you are an expat, you don’t want to be relocated on the whim of your employer after buying property.