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    In March 2019, Singapore was named the most expensive city in the world to live in (alongside Paris and Hong Kong). Yet property is still an asset people are eager to invest in because of the potential it possesses.

    If you’re investing in your 2nd (or subsequent) property, here are 7 things to know about Additional Buyer Stamp Duty (ABSD): who is liable to pay it, the exemptions, how to beat the tax, and so on.

    1. What is the Additional Buyer Stamp Duty?
    2. The Purpose of ABSD
    3. Who has to pay the ABSD?
    4. Updates in ABSD Regulation
    5. How to pay ABSD
    6. When to pay ABSD
    7. How can I avoid ABSD for a second home?


    1. What is the Additional Buyer Stamp Duty?

    The Additional Buyer Stamp Duty (ABSD) applies to owners who purchase their second and subsequent property. It’s an extra tax the government imposes on residential properties (e.g., condominiums, private estates, HDB flats, shophouses with live-in residences, and so on.)


    2. The Purpose of ABSD

    ABSD acts as a cooling measure to curtail the booming property market. Given that real estate prices skyrocketed by 9.1% in 2018, the Singapore government needed to put in place something that would prevent housing prices from going up further.

    If the increased demand had been left unchecked, the upward trend would have led to a housing bubble. In such a bubble, many are likely to commit to loans they cannot afford, which increases the risk of foreclosures. When the bubble bursts, it would’ve led to more foreclosures, an oversupply of houses, and low demand.


    3. Who has to pay the ABSD?

    You have to pay ABSD if you are a…


    That’s right: for PRs and foreigners, even if this is your first property purchased in Singapore, you are liable to pay for ABSD.

    As long as you own a shared interest in a property (even if that’s an investment property with your siblings), you are liable to pay for ABSD. Any other property purchased will be considered as your 2nd property. If paying the ABSD is an issue, you may want to rethink keeping your stake in the shared property.


    4. Updates in ABSD Regulation

    With the new regulations in play, homeowners can expect a 12% or higher ABSD rate on the current valuation of the property or the selling price, whichever is higher.

    The current ABSD rates are as follows:

    • Buying 1st Residential Property: 0% (SC), 5% (PR), 20% (FR)
    • Buying 2nd Residential Property: 12% (SC), 15% (PR), 20% (FR)
    • Buying 3rd or Subsequent Residential Property: 15% (SC and PR), 20% (FR)


    Case Study 1: ABSD on 2nd Property for Singapore Citizen

    Sam is a Singaporean citizen looking to purchase his 2nd residential property for investment purposes. The property is valued at $500,000. He agrees to buy it at $550,000.

    ABSD on 2nd Property for Singapore Citizen

    Case Study 2: ABSD on 2nd Property for Singapore PR

    Martha is a Malaysian PR looking to purchase her 2nd condominium to rent out. The property is valued at $1,200,000. After negotiations, she purchases it at $1,050,000.

    ABSD for PR 2nd Property


    5. How to pay ABSD

    ABSD can be paid via NETS, cheque, or cash order through the e-Stamping Portal. Other avenues include IRAS e-terminals or specific branches of SingPost Bureaus (Shenton Way, Novena, Chinatown, and Raffles Place).

    While CPF (Ordinary Account) funds can be used to pay your ABSD, you'll have to pay out of your pocket first before getting reimbursed from your CPF account.


    6. When to pay ABSD

    The deadline to pay is within 14 days for purchase agreements signed in Singapore, and 30 days for agreements signed overseas. You’ll want to pay punctually to avoid paying the hefty penalty (which can be 4 times your ABSD!).


    7. How can I avoid ABSD for a second home?

    There are 3 main ways to avoid the tax:

    1. Sign the agreement to sell your current property before getting the Option to Purchase (OTP) on your new property.
    2. Buy the 2nd property under another family member's name (like your spouse or child).
    3. Do a "decoupling" of your existing property by transferring your partial ownership of the home to your spouse/child.

    We'll go into more detail below.


    A. Sell Your Current Property Before Getting the OTP for the New House

    Hopefully you've got a good agent to help with this, because this will require a lot of skill to execute well. If you run into any unforeseen snags along the way, you might just find yourself with nowhere to stay in the interim!

    An alternative to this is to sell your 1st property soon after you purchase your 2nd home. However, you'll have to pay the ABSD first, then apply for a remission from IRAS. (Read also: 10+ Traps to Avoid When Upgrading to a Condo)


    B. Buying the 2nd Property Under Another Family Member's Name

    This works, but only if that said family member is Singaporean. If he or she is a Singapore PR, you'll still have to pay a 5% ABSD.

    Also, if you have to get a home loan for the purchase, their salary must be enough to apply for the loan. (Read also: HDB Loan vs Bank Loan)


    C. Do a "Decoupling" by Transferring Your Share of the Home Ownership to a Family Member

    This is one of the most common ways people use to avoid ABSD.

    Say for instance your spouse has a 15% share of the property and you have 85%. Your spouse can transfer their 15% share of the property to you via a Sales & Purchase Agreement. After that, you're free to buy the 2nd property under your spouse's name without incurring ABSD.

    Why not transfer your 85% share to your spouse, you ask? Because whichever way you go, you'll still have to pay the Buyer's Stamp Duty on the part being transferred. And if you've had the property for fewer than four years, you might have to pay the Seller's Stamp Duty as well.


    And just to be clear, you also won't have to pay ABSD if you fall in one of these categories:

    • You’re downgrading from private property to a resale flat. However, the private property must be sold within six months – though you can extend this to one year if you get approval from the relevant authorities.
    • Your properties are located outside of Singapore (subject to the laws of the respective country).




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