There have been many questions regarding Singapore’s inheritance law on property. Do we need to pay taxes for it? Is it considered a gift? Can I hold onto two properties at the same time?
We’re here to help make your lives easier. This guide will serve as your Property Inheritance 101 and answer all the frequently asked questions regarding it. Let’s go!
Q1. What is property inheritance?
Many people are actually shy to ask this question for fear of appearing dim-witted. But this is an excellent question. We have to get it out of the way before we dive deeper into the topic of property inheritance.
Put simply, the process of passing on property to another person after a person’s death is known as property inheritance. The heir is the person who was entitled to a portion or share of the deceased individual’s property. Typically, inheritance is written under the terms of a will.
Q2. What is the difference between inheritance when there is a will and without a will?
As mentioned earlier, inheritance is typically written under the terms of a well. A legitimate will allows the owner of any property or land to pass it on to their heirs. To be legitimate, the will must be signed in the presence of two or more witnesses who must be at least 21 years old.
A will grants the testator (the person who writes the will) the authority to choose who he wishes to inherit his assets. This way, one may legally determine what happens to their property when they pass away.
If your loved one passes away without having a will written, they are said to have died “intestate.” When this happens, the state’s intestacy laws will govern how your assets are dispersed. These laws are outlined in the Intestate Succession Act in Singapore and will be abided to if the deceased has no will.
The interstate laws are straightforward. It is primarily determined by two factors: the beneficiary’s relationship with the deceased and the number of beneficiaries. The table below summarises the details about beneficiaries and what they are entitled to:
Do note, however, that these same laws do not apply to Muslims. The distribution of property of a deceased Muslim in Singapore is governed by Muslim law and the Syariah Court. The Syariah Court will issue an Inheritance Certificate stating the distribution of the property according to Islamic inheritance laws.
Q3. Is there a difference if my property is under joint tenancy or tenancy-in-common?
Let us first define the joint tenancy and tenancy-in-common. The terms describe two different forms of co-ownership in Singapore. Tenancy-in-common is when each co-owner has an ‘undivided share’ in the land or property. Each owner can identify his or her own separate and distinctive share in the property. On the other hand, joint tenancy refers to a situation in which co-owners cannot identify a specific share. Co-owners hold an equal interest in the flat.
If the inherited property is under joint tenancy, the surviving party will inherit the property. Successors of the deceased tenant will receive no share of the house. This concept is known as the ‘right of survivorship’ and is the main distinctive feature of joint tenancy that distinguishes it from tenancy-in-common, which we will cover next. It is important to note that the rights of survivorship take precedence over any terms in a person’s will because property subject to rights of survivorship is not legally part of their estate at death and cannot be distributed through a will.
In the case where the inherited property is under tenancy-in-common, at the passing of any of the co-owner, his ownership in the flat will be transferred to his beneficiaries either as per his will or in its absence, in accordance with the Intestate Succession Act.
Q4. What are the taxes involved, if any?
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Estate duty in Singapore was abolished in Singapore on 15 February 2008. This means that if the owner of the property passed away on or after 15th Feb 2008, you do not have to pay any Property Inheritance Tax. But here’s the catch. To avoid paying any taxes, the property has to be inherited in accordance to a will stating clearly who the beneficiaries are, the intestate succession act or; the administration of Muslim Law Act.
If, however, the property is not distributed in line with the aforementioned, the document will be considered a gift or sale transfer. In these cases, Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) may be imposed.
For example, once you have inherited the HDB flat, you are now the owner of the property. Hence, if you choose to buy another property, then you would be liable to pay ABSD on that new property.
On the other hand, Seller’s Stamp Duty (SSD) could be applicable if the beneficiary wants to dispose of the property in the future. If the inherited property is acquired after 20 February 2010 and it is sold within the stipulated time period, you may need to pay the SSD.
Q5. Can I still inherit a property if I own a HDB or private property?
We’ll split the answer to this question into two parts. If you currently own an HDB, and wish to inherit a property, read this first part. To inherit an HDB while owning another HDB, you’re going to have to sell one of the two HDBs. That’s because you can only own one HDB flat at a time. Whichever flat you choose to keep, you have to sell the other one within 6 months of taking ownership of the inherited flat.
If you inherit a private property and own an HDB flat, whether you can retain ownership of both properties depends on your resident status. It also depends on whether or not your HDB flat is still within the Minimum Occupation Period (MOP). If you are a Singapore citizen and your flat is still within the MOP, you are required to sell the inherited property. If your flat is no longer within the MOP, you can inherit the property.
For non-Singapore citizens, you can only inherit the private property if it is a non-landed property. If the property is a landed property, you are required to sell it, unless you obtain the requisite approval from the Land Dealings Approval Unit (LDAU).
This second part is for those who currently own a private property and want to inherit another property. If you own a private property and want to inherit an HDB, you can retain ownership of both properties if the inherited property is a non-subsidised HDB flat bought before 30th August 2010. Otherwise, you’re required to sell one of the properties. Private property owners who want to inherit another private property can keep both properties.
Q6. How do I kickstart the inheritance process?
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Equipped with this knowledge about the rules and restrictions about the inheritance process, you might be wondering how you can begin. You’ll first need to submit an application to inherit a property. This can be done without a lawyer. Here are some resources for you to get started:
Non-Muslims can find this form available on the Family Justice Court’s website.
For Muslims, the forms are available on Syariah Court Singapore’s website.
Property inheritance in a nutshell
The subject of inheritance is a complicated one that is often a taboo topic. Just remember, you first have to determine if there was a will written or not. Then, if you don’t want to deal with all the paperwork on your own, you may want to engage a lawyer.
After that, familiarise yourself with the inheritance laws that differ depending on the specific profile and situation of the deceased. You can then determine if you need to sell either your existing property or the inherited one, in a situation where you own both.
It may all sound too much to handle. You might want to consider lessening your load by speaking to a real estate consultant who is well-versed with inheritance cases. Feel free to contact us here at Property Hunter!