When to tax property gains: Law made clearer

 

 

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When to tax property gains: Law made clearer

via Lushhomemedia by luxuryasiahome on 7/7/09

A PROPOSED change to income tax laws will make clearer to property sellers when they will be taxed on their profits.

Anyone who sells only one property in any four-year period will not be taxed on his profit, according to a proposed amendment to the Income Tax Act.

But if he sells another property within four years of the first sale, the profit from the second sale may be taxable.

If the proposal becomes law, it will provide certainty for owners who now cannot be sure if the taxman will come calling after they sell.

Under existing rules, an individual does not pay tax on gains made from selling a property unless the taxman decides that he is trader – someone who buys and sells multiple properties within a short time span. And there is no way for the seller to know in advance if he might be deemed a trader.

The new way of taxing property profits is one of many changes listed in a draft Income Tax (Amendment) Bill 2009 put up for public feedback last month by the Finance Ministry.

If implemented, the change will take effect from January.

A ministry spokesman told The Straits Times yesterday that the proposed change aims to provide certainty of non-taxation to individuals who own property.

Once it takes effect, the individual who sells a property for a profit can be sure that his gains will not be taxed – provided he had not sold any other property in the previous four years.

If he sold other properties within that period, the spokesman said, the Inland Revenue Authority of Singapore (Iras) will decide whether he should be taxed, 'based on the facts and circumstances, no different from the present tax treatment'.

Although Singapore does not have a capital gains tax, profits from selling property can be taxed at the appropriate individual income tax rates if Iras deems the seller to be a trader.

Tax and property market experts contacted by The Straits Times welcomed the move to clear the air over taxes on property sales.

Mr Tan Tiong Cheng, chairman of property consultant Knight Frank, said: 'Since the Government has clarified that the treatment on capital gains would remain the same, it will be business as usual. Genuine investors will not be deterred from buying properties.'

A stockbroking director said that the Government's assurance will calm any jitters investors might have experienced when they first learnt of the proposed tax change.

'There were initial misgivings that this provision might be a roundabout way to introduce a capital gains tax on properties. The misconception has been cleared,' he noted.

But others felt that by raising the issue of taxing property sales gains, the Government is also sending a signal to speculators that they can expect to be taxed if they buy properties to 'flip' for quick money.

During the property boom of 2007, some speculators could have bought and sold as many as half a dozen properties in the space of a year.

With the change, a property owner juggling several properties cannot sell more than one within a four-year period if he wants to be sure of avoiding a tax bill on his gains.

Since February, sales of new private homes have exceeded 1,000 units a month compared to a monthly average of 330 units last year. Worries are surfacing that speculators might be ramping up sales and driving up prices, as the economy recovers.

Businessman James Chen, 40, said the proposed change may make the short-term investor think harder before buying.

'He will have to consider whether he wants to take such a risk and give up a part of the gains as taxes.'

The draft Bill can be read at the Finance Ministry website www.mof.gov.sg and the public has up to next Tuesday to give feedback.

The Bill is expected to go before Parliament later in the year.

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TARGET OF CHANGES

'He will have to consider whether he wants to take such a risk and give up a part of the gains as taxes.' – Businessman James Chen, 40, on how the proposed change may make the short-term investor think harder before buying. A property owner juggling several properties cannot sell more than one within a four-year period if he wants to be sure of avoiding a tax bill on his gains.

Source : Straits Times – 8 Jul 2009

 

 

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Singapore to release advance Q2 GDP data on July 14

 

 

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Singapore to release advance Q2 GDP data on July 14

via EdgeSingapore RSS on 7/6/09

Singapore will annnounce advance estimates for second-quarter gross domestic product at 8 a.m. local time (0000 GMT) on July 14, the government said today.

The city-state reports advance GDP data based largely on information from the first two months of the quarter, and follows up with detailed GDP numbers several weeks later.

Singapore's economy in the second quarter of 2009 is expected to grow at an annualised and seasonally adjusted rate of 16.4%, ending a technical recession after four consecutive quarters of contraction, a Thomson Reuters poll shows.

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CORRECTIVE MOVE OR SIGNIFICANT DOWNTREND?

 

 

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CORRECTIVE MOVE OR SIGNIFICANT DOWNTREND?

via StockCharts Blogs - ChartWatchers by Tom Bowley on 7/4/09

I believe it's the former.  Thursday's selloff after the June Employment report was a bit scary, particularly if you're only looking at the magnitude of the point losses.  But, in my opinion, no key support levels have been violated.  That means the beginning of next week will be worth watching.  We have been in the midst of an uptrend for the last few months and we are still in it.  We have a series of higher highs and higher lows off the March lows that has not been broken - yet.  Therefore, I say we play the trend at hand, which still is higher.

There were plenty of warning signs recently as to a short-term top - VIX hitting support, negative divergences on the daily MACD across the major indices, overbought conditions, light volume on early June highs, lack of participation from key sectors that led the rally since March, like financials and consumer discretionary stocks.   Those warning signs did, in fact, lead to a short-term top.

This begs the question - is the bullish move off the March lows over?  To be honest, that's a tough call.  I'd place about a 60-40 chance on the major indices putting in higher highs during July.  If it happens, it will most likely happen within the next two weeks as historical indications tell me that this period is the strongest in July, except for perhaps the last couple trading days of the month.  Once we get past mid-July, all bets are off as we enter the third most bearish period historically in the market.  Dating back to 1950, there's a one week period in July, just past the mid-point, where the S&P 500 has produced annualized LOSSES of 36%.  That trails only bearish periods in September and October.

The market has a lot of reasons over the next few months to sell off.  Historically, the worst time period of the year is from mid-July to late-September.  Since 1998, the S&P 500 has gained more than 1.5% during this period only once - in 2006.  On the flip side, we've seen losses in the range of 5%-16% during 5 different years.  Clearly, the historical trend has been towards losses during these summer months.

I can make a solid case for both bulls and bears, which is why it will be difficult to trade near-term.  If you're right, you can make some nice money.  But with the risk/reward up in the air, doing too much makes little sense at this time.  First, here are a couple charts that are quite bullish in my opinion:

On the bears side is the following:

For the very near-term, I'm buying the bulls argument (but not aggressively so) and will remain on the long side.  If key price support levels (primarily May lows) fail to hold, I'll grow much more cautious.  Further out, I'm a student of history and I tend not to argue with trends that stand the test of time.  Therefore, I'll remain cautious throughout the remainder of the summer, looking only for the best opportunities in terms of risk/reward.  You can click here to review our alert performance over the past several months.

Those who are ultra-conservative should probably be sitting in cash at the moment or long with one finger on the sell button.  Enjoy the holiday weekend!

Happy trading!

 

 

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Sky@eleven sees resale gains of 28% and up

 

 

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Sky@eleven sees resale gains of 28% and up

via Lushhomemedia by luxuryasiahome on 7/3/09

There was a significant jump in the number of secondary market transactions at projects near the CBD earlier this month. In the Thomson area, at Sky@eleven, three units were sold in the first week of June for between $1,140 psf and $1,200 psf. The most recent transaction was a 1,851 sq ft unit on the 24th floor, which changed hands at $2.2 million or $1,200 psf. The seller had purchased the unit from the developer for $1.7 million or $931 psf in 2007 when the project was launched. This represents a gain of over 28%.

On the 25th floor, a larger unit was sold for $2.59 million or $1,140 psf. It was the third time in two years that the property changed hands. It was sold for $2.5 million or $1,101 psf in April 2007 and $2.08 million or $917 psf in February 2007.

The project, by Singapore Press Holdings, is targeted for completion next year. Less than 1% of resale units were sold below launch price according to SPH's 1H2009 results presentation slides dated April 13.

Over at the 545-unit RiverGate along Robertson Quay, a spike in transactions in the resale market is also evident. There were 16 transactions ranging from $1,270 psf to $1,582 psf from May 30 to June 5 according to caveats lodged with URA Realis. The largest unit sold during the period was a 3,842 sq ft apartment on the 38th floor that changed hands for $6.08 million or $1,582 psf.

Sentiment has improved in recent months. From January to March, the project saw only 11 transactions in the secondary market in the price range of $1,130 psf to $1,416 psf. Sales started to pick up thereafter, with 51 transactions for the period from April 1 to June 5 with prices trending higher, ranging from $1,146 psf to $1,582 psf.

As one of the few waterfront sites along the Singapore River, the 43-storey development was highly sought after by foreign and local buyers during its launch in 2005. RiverGate, a joint-venture project by CapitaLand and Hwa Hong Corp, received its TOP in March. In 2007, at the peak of the property market, prices of one of its units soared to as high as $2,701 psf.

Over at Orchard, a unit at Vida sold for more than $2,000 psf. The buyer of a 527 sq ft apartment on the 13th floor paid $1.07 million or $2,029 psf to the developer at the launch of this exclusive condominium. At Scotts Highpark, a 4,208 sq ft unit on the 17th floor changed hands at $8 million or $1,901 psf. The seller had purchased it for $8.05 million or $1,914 psf from the developer in 2006 during the launch.

About 10 minutes away from Orchard Road, along Leonie Hill Road, two leasehold apartments at Horizon Tower were sold at below $1,000 psf. On the 15th floor, a 2,486 sq ft unit changed hands for $2.03 million or $816 psf. On the 13th floor, a smaller unit was sold at $1.82 million or $751 psf. The seller had purchased the unit for $1.135 million or $439 psf in 2003.

While prices and sales volume have moved up, some market watchers warn that the upswing may not be sustainable given a weak rental market and oversupply.

Soure : The Edge – 29 Jun 2009

 

 

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Developers rush to catch buying wave

 

 

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Developers rush to catch buying wave

via Lushhomemedia by luxuryasiahome on 7/4/09

The stream of new property projects being launched continues to be strong. Another mass-market development, Oasis@Elias, has officially hit the market, after a quiet round of sales.

The 388-unit condominium near Pasir Ris beach was launched yesterday after it sold 71 units – or half of the units previewed – at $670 per sq ft on average at last week's preview.

CB Richard Ellis, which is marketing the condo, said units with a sea view were popular. Some 80 per cent of the buyers were HDB upgraders. The units are fairly large, ranging in size from 947 sq ft to 2,659 sq ft.

Generally, developers are rushing new launches to capitalise on the strong buying wave, particularly for affordably priced mass-market developments.

Releases in the past three weeks include Vista Residences in Jalan Datoh, Residences @ Killiney and the already sold-out 8@Woodleigh.

Developments that are available for sale this month include Ascentia Sky, next to Metropolitan condominium in Alexandra Road, Silversea in Amber Road, The Gale in Loyang and Sophia Residence on the former Sophia Court site near Selegie Road. An 85-unit development in Balmoral Road (Volari) is also coming to market soon.

The 373-unit, 99-year leasehold Ascentia Sky is expected to hold a public preview in the middle of the month, said a Wing Tai spokesman. The indicative price before the preview discount is $1,300 psf to $1,500 psf, he said.

Wing Tai and Greatearth Developments had bought the Ascentia Sky site for a bullish $639 per sq ft per plot ratio in late 2007. Property analysts had said then that the land price would translate into an estimated breakeven price of $1,000 psf to $1,100 psf for the future condo, and the units there should sell for at least $1,100 psf to $1,200 psf.

Projects such as Ascentia Sky, Silversea and Sophia Residence have been lined up for launch for some time now.

In late 2007, developer GuocoLand had said it hoped to push out the 272-unit Sophia Residence in the third quarter of last year. But that did not happen.

As for the 383-unit Silversea, there was already talk as early as late 2007 that it would be launched soon. It did go out to market for a while last September, selling several units at a median price of $1,400 psf and three at a median level of $1,242 psf in October. Because of the poor market conditions, sales were then stopped.

Developers are a bit more upbeat now that buyers, including speculators, have been coming out in droves, though they remain fairly cautious and price-sensitive.

Still, buyers should exercise prudence in the light of market uncertainty, advised property experts. Ms Chua Chor Hoon, head of DTZ South-east Asia research, said in a report last Thursday that the rise in prices in the second quarter is likely a 'temporary blip' as it is largely due to the fear among buyers of missing out on the bottom, pent-up demand and low interest rates.

Average resale prices have fallen by only 10 per cent to 35 per cent from the fourth quarter of 2007 to the first quarter of this year, compared with a larger fall of 35 per cent to 45 per cent during the Asian financial crisis, she said.

'Without a clear recovery in sight for the United States and Singapore economies, the price recovery in the second quarter is not sustainable and sales volume would be affected if prices continue to rise,' said Ms Chua.

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COMING UP

Ascentia Sky

Where: Alexandra Road next to Metropolitan condominium
How big: 373 units
How much: Indicative pricing, before a preview discount, is from $1,300 psf to $1,500 psf.

Sophia Residence

Where: Adis Road near Parklane Shopping Mall
How big: 272 units
How much: Indicative pricing said to be $1,500 psf to $2,000 psf.

Silversea

Where: Amber Road on the former Amberville site
How big: 383 units
How much: Preview prices said to start from $1,300 psf

The Gale

Where: Flora Road
How big: 329 units
How much: Indicative pricing said to be $650 psf to $700 psf

Source : Sunday Times – 5 Jul 2009

 

 

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Private resale home prices up in Q2, says DTZ

 

 

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Private resale home prices up in Q2, says DTZ

via Lushhomemedia by luxuryasiahome on 7/3/09

12.8% increase in average price of 2-bedroom units; firm expects full-year primary market sales to top 2006 figure of 11,147 units

THE average price of freehold non-landed resale private homes in prime districts 9, 10 and 11 increased 11.3 per cent to $1,247 per sq foot in the second quarter from Q1, says DTZ.

This followed a 3.7 per cent quarter-on-quarter (q-o-q) price fall in Q1.

Two-bedroom units posted a 12.8 per cent q-on-q gain in Q2, as their lower quantum prices stimulated interest among people hoping to own prime district property.

But DTZ considers the Q2 price gain a blip supported by buyers' fears of missing the bottom, pent-up demand and low interest rates – rather than economic fundamentals.

As for primary market sales, the property firm is now projecting that developers' private home sales for the whole of 2009 are likely to surpass the 11,147 units achieved in 2006, which was the second-highest performance after the 14,811 homes they sold in 2007.

In the first six months of this year, the tally was about 6,700 to 6,900 units.

DTZ's figures also show the average price of luxurious non-landed resale homes rose 9.6 per cent q-o-q to $2,060 psf in Q2.

Outside the prime districts, the average resale price of 99-year leasehold homes rose 3.2 per cent q-o-q to $573 psf in Q2, as prices had fallen less and there are fewer 'specu-vestors' in this segment.

Earlier this week, the Urban Redevelopment Authority's flash estimate showed the overall private home price index declined 5.9 per cent in Q2 from Q1.

Despite DTZ's figures showing an increase in resale prices of non-landed homes in Q2, DTZ's head of South-east Asia Research Chua Chor Hoon said: 'Without a clear recovery in sight for the US and Singapore economies, the price recovery in Q2 2009 is not sustainable and sales volume would be affected if prices continue to rise.'

She noted that average resale prices have fell only 10-35 per cent between Q4 2007 and Q1 2009, compared with the fall of 35-45 per cent from the Q2 1996 peak to the Q4 1998 Asian financial crisis trough.

The number of caveats lodged for resales and sub-sales in April and May this year exceeded that for the whole of Q1 by 70 per cent. The proportion of foreign buyers, excluding Singapore permanent residents, rose from 5 per cent in Q1 to 8 per cent in April and May.

Indonesians and Malaysians accounted for 49 per cent of caveats lodged in April and May by foreigners and Singapore PRs, compared with 40 per cent in Q1.

Sub-sales and resales are secondary-market transactions. Sub-sales involve projects that have yet to obtain a Certificate of Statutory Completion (CSC), while resales relate to projects that have received CSC.

Meanwhile, as new supply came on stream amid waning demand, rents continued to fall in Q2, although at a slower pace than in Q1.

The average rental value of prime district homes slipped 9.1 per cent to $3.32 psf per month in Q2, after a 16.2 per cent slide in Q1.

Rents for luxury homes were the hardest hit, with a 10.6 per cent decline to $4.65 psf per month – back to their Q4 2005 level.

Source : Business Times – 4 Jul 2009

 

 

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