1Upfront Purchase Costs
Downpayment
Industrial loans typically cap financing at 80% of the purchase price, meaning buyers must pay a minimum of 20% upfront. Of that 20%, at least 5% must be in cash; the remaining 15% can be paid via cash or certain corporate loans.
Option to Purchase (OTP)
Typically a 1% option fee is paid to the seller to secure the property while your legal team drafts the Sale & Purchase Agreement.
2Taxes & Stamp Duties
Buyer's Stamp Duty (BSD)
Calculated on the higher of the purchase price or market value, BSD is tiered:
Additional Buyer's Stamp Duty (ABSD)
Unlike residential properties, there is no ABSD for non-residential or industrial properties. This is one of the biggest cost advantages of industrial investing.
Seller's Stamp Duty (SSD)
If you sell the factory within the first 3 years of purchasing, you are liable to pay SSD:
- Within Year 1: 15% of the selling price / market value
- Within Year 2: 10% of the selling price / market value
- Within Year 3: 5% of the selling price / market value
Goods & Services Tax (GST)
The standard 9% GST applies if the property seller is GST-registered. GST must be paid in cash and cannot be offset by bank loans. If your purchasing entity is a GST-registered business, you can claim this back as input tax through your periodic filings.
3Ongoing Property Taxes
Property Tax
All commercial and industrial properties are taxed at a flat rate of 10% of the property's Annual Value (AV). The AV is estimated by the Inland Revenue Authority of Singapore (IRAS) based on the prevailing market rent of the factory.
4Other Routine Fees
- Legal fees: conveyancing for drafting and finalising the property transfer.
- Valuation fees: formal property-valuation reports required by the bank for financing.
- Agent fees: typically borne by the seller, but worth confirming as part of your offer.