Put water and sugar in a medium saucepan and bring mixture to a boil.
Once boiling, lower heat and let simmer for about 10-15 minutes, until sugar is completely dissolved and mixture has thickened a bit.
Remove saucepan from heat and stir in butter extract, rum extract, vanilla extract, and ground nutmeg.
Pour syrup into a mason jar or bowl and place in fridge to cool completely before using. Syrup will continue to thicken as it cools.