Question 1
Mr Iqbal sold a property in 2026 at a gain and asks whether it is taxable. IRAS is considering whether he was merely realising a capital investment or was trading in properties, applying the Badges of Trade to the facts in totality. He held the property only briefly and had spruced it up before selling, and wants to know how IRAS decides whether the gain is taxable at all.
Consider the following statements.
- (i) Singapore generally does not tax capital gains on the sale of a property.
- (ii) A gain from trading in properties, or with a profit-seeking motive, may be taxable as income.
- (iii) IRAS applies the Badges of Trade — intention, holding period, frequency, improvements and financing — in totality.
- (iv) A single factor, such as selling within six months, by itself makes the gain a taxable trading gain.
Show the answer and full explanation
Answer: B
The rule. Singapore has no capital gains tax, but a trading gain on property is taxable income. Whether a gain is capital or trading is decided by the five Badges of Trade — intention, holding period, frequency, improvements and financing — applied in totality; no single factor is decisive.
Why B is correct. (i), (ii) and (iii) are correct. (iv) is false — one factor alone (such as a short holding period) does not by itself make a trading gain.
The other options.
- A adds the false (iv).
- C drops (ii), that a trading gain is taxable.
- D drops (i), that capital gains are generally untaxed.
Exam note. A short holding period is only one badge — the trading-versus-capital question turns on the totality of the five.
Singapore has no capital gains tax, but a trading gain on property is taxable income →