Not tightening current income tax policy and not an anti-speculation measure – The Ministry of Finance (MOF) clarified that the proposed change in the Income Tax public consultation document involves no tightening of the current income tax policy for individuals who sell their properties. The proposed change is therefore not an anti-speculation measure.

Certainty of non-taxation for individuals who do not sell properties frequently – The only change proposed involves a relaxation of income tax treatment aimed at giving certainty of non-taxation to individuals who do not sell properties frequently. Specifically, when individuals sell their properties, they will be certain that the gains made from selling their properties will not be subject to income tax if they have not sold any properties in the preceding four years.

No change to current and long standing income tax treatment – It does not mean that individuals who have sold more than one property within a four year period will automatically be subject to income tax. Whether individuals who sell properties more frequently are subject to income tax depends on the facts and circumstances of each case. IRAS has in the past brought to tax a small number of individuals – who regularly transact in property, and whose gains from the disposals are assessed to be income.

No requirement to report sale of properties - There is no requirement that individuals must report to IRAS for income tax purpose every time they sell their properties – this will also continue to apply going forward. IRAS has always conducted its own audits of property transactions for possible cases of assessable income.

Maintain caution – We however maintain our cautious view on the developers as we believe the current strength in the residential market is not the start of a cyclical upswing. As highlighted in our reported dated 11 June, we think a short term spike in prices possible but unsustainable given impending supply due to completions. Sell ratings on City Dev, CapitaLand and Keppel Land.