Disclaimer (Block 1): This article is for educational purposes only and is intended to assist CEA-registered property agents in understanding regulatory frameworks. It does not constitute financial, tax, or legal advice. LEVR's calculations are indicative only. Always verify rates and eligibility with your bank, HDB, CPF Board, or a licensed financial advisor before advising clients.
Why GST Matters in Commercial Property
Singapore imposes Goods and Services Tax (GST) at 9% (from 1 January 2024) on taxable supplies made by GST-registered persons. Residential property transactions are exempt supplies — no GST is chargeable. But commercial, industrial, and mixed-use properties that are not used for residential purposes are taxable supplies, meaning:
- The seller must charge GST on the sale price if they are GST-registered and the property is a taxable supply.
- The tenant must pay GST on rent if the landlord is GST-registered and the lease is of non-residential property.
- The buyer/tenant can recover the GST as input tax only if they are themselves GST-registered and the property is used for their taxable business activities.
Which Properties Attract GST
The key distinction is whether the property is residential or non-residential. Under the GST Act, the sale and lease of residential properties are exempt supplies — no GST is chargeable regardless of whether the seller is GST-registered. All other property types are taxable supplies when the seller/landlord is GST-registered:
| Property Type | GST on Sale | GST on Rent |
|---|---|---|
| HDB flat (residential) | Exempt | Exempt |
| Private condo / apartment | Exempt | Exempt |
| Landed house | Exempt | Exempt |
| Shophouse (commercial floors) | Taxable (9%) | Taxable (9%) |
| Office unit | Taxable (9%) | Taxable (9%) |
| Industrial / warehouse | Taxable (9%) | Taxable (9%) |
| Retail unit in mall | Taxable (9%) | Taxable (9%) |
| Mixed-use (residential + commercial) | Apportioned | Apportioned |
For mixed-use properties such as a shophouse with a commercial ground floor and residential upper floors, IRAS requires GST to be apportioned. The commercial portion is taxable; the residential portion is exempt. The apportionment method (typically by floor area) must be agreed with IRAS.
When GST Is Chargeable: the GST-Registration Threshold
GST is only chargeable by a GST-registered person. Businesses with annual taxable turnover above S$1 million must register for GST. Businesses below this threshold may register voluntarily. Individuals who own commercial property as personal assets and whose property income alone does not exceed S$1 million are generally not required to register.
In practice, most corporate sellers and institutional landlords of commercial property are GST-registered. Private individual sellers of a single shophouse may not be registered — the buyer must confirm GST registration status before finalising the purchase price.
Input Tax Recovery — Who Can Claim GST Back
GST paid on a commercial property purchase is an input tax. It can be recovered in full if the buyer:
- Is registered for GST, and
- Uses the property exclusively for making taxable supplies (i.e., their business activities are taxable, not exempt or non-business).
A company buying an office unit for its own business use and that is GST-registered can claim back the S$270,000 GST paid on a S$3 million purchase. The net GST cost is zero.
Conversely, a financial institution or insurance company whose core business makes exempt supplies (financial services are exempt from GST) cannot recover input tax on commercial property. The GST is a permanent cost — it must be factored into the acquisition price alongside BSD.
Transfer of Going Concern (TOGC) — the GST Exemption for Business Sales
When commercial property is sold together with a business as a going concern — for example, a shophouse sold together with the operating business conducted from it — the transaction may qualify as a Transfer of Going Concern (TOGC). Under IRAS guidelines, a qualifying TOGC is treated as neither a supply of goods nor services for GST purposes, meaning no GST is charged on the sale.
For TOGC treatment to apply:
- The business transferred must be capable of separate operation by the buyer.
- The buyer must be, or immediately become, a GST-registered person who uses the property for the same kind of taxable business.
- The property must be a component of the business transferred — not sold in isolation.
TOGC is frequently relevant when investors buy tenanted shophouses together with the landlord's leasing business. If conditions are met, the 9% GST on the property does not apply, saving the buyer a significant sum.
Stamp Duty Interaction: BSD Is Calculated on the GST-Inclusive or GST-Exclusive Price?
Buyer's Stamp Duty (BSD) for non-residential properties is calculated on the higher of the purchase price or the market value. IRAS has confirmed that where GST is separately stated in the contract, BSD is computed on the GST-exclusive price — i.e., the purchase price before adding GST.
However, if the contract states a lump-sum price that is expressed as GST-inclusive, IRAS will calculate BSD on that lump-sum without deducting the embedded GST component. Contract drafting matters.
GST on Commercial Property Rent
When a GST-registered landlord leases commercial property, GST at 9% is chargeable on the rent. The GST must be shown on the tax invoice issued to the tenant. The tenant, if GST-registered and using the property for taxable business activities, can claim the GST back as input tax.
The practical implication for agents marketing commercial tenancies: the quoted rent in listings should specify whether it is GST-exclusive (the tenant pays an additional 9% on top) or GST-inclusive (landlord absorbs GST within the stated figure). Most institutional landlords quote GST-exclusive rents.
New Residential Units in Mixed-Use Developments
Developers of mixed-use projects (integrated developments with both residential and commercial components) charge GST only on the commercial units. Residential unit purchases in the same development are exempt. Buyers of dual-key units with a commercial component should check with the developer whether any portion of the purchase price carries GST.
Agent Advisory Checklist for Commercial Transactions
- Confirm whether the seller is GST-registered (check IRAS register before tabling any offer).
- Establish whether the contract price is GST-exclusive or GST-inclusive and reflect this clearly in the OTP/S&P.
- Advise the buyer to determine whether they can recover the GST as input tax before confirming the acquisition price.
- Where the sale involves a going concern, flag TOGC eligibility to the buyer's lawyers early.
- For tenancy transactions, ensure the tenancy agreement states whether rent is GST-exclusive and that the tenant is aware of the additional 9%.
- For mixed-use properties, note that BSD is on the full commercial value and GST applies only to the commercial portion.
Frequently Asked Questions
Q: Is there GST on buying a shophouse?
A: If the seller is GST-registered, 9% GST is chargeable on the commercial portions of the shophouse. The residential upper floors, if any, are exempt. Confirm the seller's GST status before finalising the purchase price.
Q: Can an individual buyer recover GST paid on a commercial property purchase?
A: Only if the individual is GST-registered and uses the property for their own taxable business activities. Most private investors buying commercial property for passive rental income are not GST-registered and cannot recover the GST — it is a permanent cost.
Q: Does BSD include GST?
A: BSD is computed on the GST-exclusive price where GST is separately stated in the contract. If the contract states a single GST-inclusive lump sum, BSD is on the full lump sum. Contract drafting determines the outcome.
Q: My client is buying a tenanted commercial unit — does TOGC apply?
A: TOGC may apply if the sale includes the leasing business as a going concern and the buyer immediately becomes GST-registered for the same business. This is a legal and tax question — refer the client to their lawyers and tax adviser before assuming TOGC.
Q: Is GST charged on the security deposit for a commercial tenancy?
A: Security deposits that are refundable at lease end are not subject to GST as they are not consideration for a supply. However, forfeitures or applications of the deposit against outstanding rent would have GST implications. The landlord's accountant should advise.
Disclaimer (Block 3): LEVR's calculator outputs are estimates based on inputs provided and current regulatory parameters as known at time of publication. They are not a guarantee of borrowing capacity, stamp duty liability, or CPF eligibility. Regulatory thresholds and rates may change. Always verify with IRAS, your bank, or a licensed financial advisor before making financial decisions.