Let’s talk about property inheritance, people usually don’t discuss this because it does not happen very often. When the situation arises, it is definitely useful to know. And before you start to celebrate on potential income stream from rental, there are a few things you’d better consider.
Type of Property
If you’re inheriting a HDB flat, chances are you aren’t allow to hold on to it. Why?
You will need to sell the flat that you’re inheriting on the following conditions:
- If you already own your own HDB flat. Why?
You can’t own two HDB properties.
- The flat you are inherit was purchased after August 2010.
So you don’t own any other HDB flat, but you have a private residential property on hand. What happens?
This will very much depending on when the HDB flat was purchased; if it was bought before August 2010 without any housing subsidies, you are allowed keep the flat.However, if the flat was bought after that date, or with subsidies, then you must sell the flat.
Also, if you are inheriting a flat in which the Minimum Occupancy Period (MOP) of five years isn’t met, you’ll have to move in if you want to keep it.
Check the apartment’s history
Be prepared for a shocker if you have inherited a condominium or apartment that hasn’t paid it maintenance before. While many others are used to the town council conservancy charges for the HDB apartments, private residential properties are very different. There is the maintenance to think about.
As a rule of thumb, the larger the floor area of the apartment size will mean that there will be fewer residents and in turn, result in higher monthly maintenance charges. Typically, such monthly costs range from anywhere between $400 to $600 with some of the luxury properties upwards of $800 especially those with concierge services.
One thing to note for many private residential properties is that the management committee will usually call for billing on quarterly or annually basis, this is to minimise collection frequency. So, brace yourself when the very first bill arrives. Remember, there may also be an interest charge for paying late, so don’t take your time.
Check before you sell the inherited property.
Let’s say it’s too much of a hassle to keep the house, and you want to sell it. Most of the time, you won’t be affected by the Seller Stamp Duty (SSD), as you can apply for SSD remission – you can use the date the property was originally bought as the acquisition date. You CAN end up paying Seller Stamp Duty when you sell an inherited property
However, if you’re one of the unfortunate few who inherited a property soon after it was bought (on the first, second, or third year after the purchase), you could end up paying the SSD.
If you were just about to buy a house, remember that the ABSD now applies to you.
Just in case you’re hunting a home now, check out the latest new condo launch for 2017.