SINGAPORE - The Government has raised the top marginal buyer's stamp duty rate from 3 per cent to 4 per cent for residential properties worth more than $1 million.

The new rate will apply to all residential properties acquired from Feb 20.

Buyer's stamp duty is payable on the acceptance of an option to purchase agreement or sale and purchase agreement.

Announcing the surprise move in his Budget speech on Monday (Feb 19), Finance Minister Heng Swee Keat said it was in line with changes to the tax system to make it more progressive.

The 4 per cent rate will apply to the value of the property in excess of $1 million.

Currently, buyers of residential properties pay a 1 to 3 per cent stamp duty tiered as with personal income taxes.

Buyer's stamp duty rates have been unchanged since 1996.

But from Tuesday (Feb 20) onwards, for a property worth over $1.5 million for example, the first $180,000 will be charged a 1 per cent buyer's stamp duty, the next $180,000 will be levied a 2 per cent stamp duty, the next $640,000 will face a 3 per cent rate, while the balance $500,000 of value will be charged the new top rate of 4 per cent.

The buyer's stamp duty rates for non-residential properties will remain unchanged, said Mr Heng.

He added that the Government "will continue to study options to ensure that our tax system remains progressive".