What is ABSD?
Have you come across this abbreviation?
First introduced in 2011 and revised in 2013 as a property cooling measure, Additional Buyer’s Stamp Duty or ABSD is a form of tax that is payable in addition to the usual Buyer’s Stamp Duty whenever someone makes a purchase or acquires a piece of residential property. Examples include HDB flats and private properties.
The amount of ABSD payable is dependent on a person’s nationality, and in some cases the PR status as well.
The current prevailing rates are shown below:
(Table taken from IRAS Singapore)
Ways to Prevent Paying ABSD
There are a few methods that you can take to prevent paying ABSD.
One popular way is decoupling. This refers to the process where the joint ownership of a piece of property is separated so that it can be transferred to a single owner.
This is done differently for different types of properties.
For example, for private properties, it can either be done by gifting or part of purchase/sale.
It is recommended to do it through part of purchase/sale as gifting can pose complications when you try to sell the property afterwards.
Part of purchase/sale includes the sale of the shares owned by 2 (Singaporean) individuals to just one of them. Likewise, the goal is to allow one party to purchase another piece of property as a first-timer, i.e. with a loan and no ABSD.
For HDB flats, decoupling used to be possible. However this loophole was closed in April 2016.
It is subject to conditions, such as whether the flat has an existing mortgage loan or whether it was bought using a loan. It also is advised that you contact the relevant HDB authorities for clearer clarification and update about the current regulations.
Don’t hesitate to contact me to know more, as this is simply just a snippet. Remember – it is only to your advantage to know more!