Additional Buyer’s Stamp Duty (ABSD)

Additional Buyers Stamp Duty ABSD Singapore

1.Introduction

In Singapore, the Additional Buyers Stamp Duty (ABSD) was first announced in 2011 and revised on 12 Jan 2013. It is part of the cooling measures that the Singapore Government has introduced to slow the growth of the property market. For simplicity sake and to avoid confusion, this article will only cover the rules those still applicable today (i.e. 26 Jan 2016).

2.What is it?

It is a tax payable on top of the normal Buyers Stamp Duty when you purchase or acquire a residential property i.e. applicable to both HDB flats and Private Properties. The rate that you need to pay depends on your nationality (and/or your PR status). The video below gives details about the Buyer Stamp Duty (BSD) and Additional Buyers Stamp Duty (ABSD).

3. How much do I need to pay when I purchase a property in Singapore?

How Much ABSD Do i need to pay in SIngapore

Affected Groups

Buying a First
Residential 
Property

Buying a second
Residential 
Property

Buying a third
and subsequent
Residential 
Property

Singaporeans (and selected 
nationalities/PR) 

Not Applicable

7 %

10 %

Singaporean Permanent Residents
(SPRs)

5 %

10 %

10 %

Foreigners and Entities*

15 %

15 %

15 %

* Entity means a person who is not an individual, and includes an unincorporated association, a trustee for a collective investment scheme when acting in that capacity, a trustee-manager for a business trust when acting in that capacity and, in a case where the property conveyed, transferred or assigned is to be held as partnership property, the partners of the partnership whether or not any of them is an individual.

4.Points to Note

    • The Additional Buyers Stamp Duty in Singapore is determined based on property ownership. As per IRAS’s website, the definition of ownership is “Whether owned wholly, partially or jointly with others”.
  • It is still payable whether the property is fully paid or you are still paying a mortgage.The other cooling measure that will affect you if you are still servicing a mortgage is the "Loan to Valuation" or the LTV.
  • ​Please note that the Buyers Stamp Duty is still payable at the same rate.

5. Nationalities / PRs of countries treated as Singaporeans when paying the Additional Buyers Stamp Duty

Additional Buyer Stamp Duty for Foreigners

There are nationalities of a few countries which would be treated as Singaporeans (for purposes of the ABSD) due to the Free Trade Agreements between Singapore and these countries.

This is not automatic and you will still need to submit an application to IRAS but you can withhold the payment while submitting the application to IRAS. Read more here.

Affected Groups

Buying a First
Residential 
Property

Buying a second
Residential 
Property

Buying a third
and subsequent
Residential 
Property

The Following Groups 
would be treated as Singaporeans. 
Nationals and PRs of 
 - Iceland
 - Liechtenstein 
 - Norway 
 - Switzerland

​Nationals of 

 - United States of America (USA)  ​

Not Applicable

7 %

10 %

6.Payment

For those who have to pay the Additional stamp duty , you are required to stamp the documents (i.e. make payment) within 14 days of

i) Exercising the OTP (Option to Purchase)

ii) signing of the Sales and Purchase Agreement ( where there is no OTP)

iii) the date of transfer if (i) and (ii) is not applicable.

If the documents were signed overseas, the A.B.S.D is payable within 30 days of the receipt of the documents in Singapore.

7. What are the scenarios where ABSD doesn't need to be paid?

There are certain scenarios where buyers would be able to get the Additional Buyer Stamp Duty refunded or not pay it at all. This is explained in IRAS's page here.

One group that can benefit are Singaporean Citizens whose spouses are Singapore Permanent Residents (SPRs) or Foreigners. IRAS does not specify if this applies to HDB or only private properties, so its best if you check before you purchase.

I. First Property for Married SC-PR/ SC-FR Couples

For Singaporean Couples, it is quite straightforward that you only need to factor in the normal buyer stamp duty for their first matrimonial home.

But for Singaporeans who gets married to a SPR or a Foreign Spouse we often get the following question,

"If I am a Singapore Citizen and my partner is a Permanent Resident (SPR) / a Foreigner, do I need to pay the ABSD?"

According to IRAS, you might not have to.

For married couples i.e.

  • SC-PR (Singapore Citizen + Permanent Resident) or
  • SC-FR (Singapore Citizen + Foreigner) married couples who are purchasing their first property, you are able to apply for remission i.e. you do not need to pay the 5% or 7% ABSD that PRs and Foreigners need to pay respectively.

Click here to access IRAS's table on the rates payable .

Note of advice : We have come across both agents , developer staff as well as law firms who are not aware of the remission, so you might want to be extra careful when doing the calculations.

The cooling measures and recent drop in property prices has led to some creative methods of restructuring your multiple properties to avoid the ABSD.

We've created a free guide book with common case studies faced by our clients to give you an idea of your options. Download it here. 

If your agent has not reviewed your portfolio to see if it is possible to reduce the amount of ABSD you pay, you may want to contact us at 96918885 or email us at askus@propertyrocking.com. 

Buyers do not need to pay any agent's commission ( we get it from the developer) so our service does not come with any strings attached !

You would need to furnish the following documents in your application for remission.

  • Marriage certificate
  • Identification document
  • Acceptance to Option to Purchase / Sale and Purchase Agreement / Contract
  • Note: Update on 16 Aug 2015 : Please consult your lawyers for the updated procedure.

In addition, please check with IRAS regarding this policy prior to purchasing your property as this post might not be updated in time.

In the event you do not fit into the above category, you might want to consider restructuring your property portfolio. One common method is to decouple, similar to what is done in this ST Property Article

II. When you decoupling

Decoupling refers to the process of separating the joint ownership of a property so it can be transferred to a single owner. This is a legal procedure that will be done by lawyers. Because of the cooling measures, this has been an increasingly popular method for joint property owners to free up one owner's name, so that he can purchase another property without incurring the ABSD or the 80% LTV restriction (if his first property still has a mortgage loan).

How is Decoupling done?

Please note that your lawyer should provide legal advice for all the options so that you are able to find the most suitable one for your situation.

FOR PRIVATE PROPERTIES

Decoupling can either be done by

  • Way of Gift
  • Part Purchase/Sale
A. Decoupling by Way of Gift

Decoupling by way of Gift means that the property ownership is transferred to the other party without any monetary considerations (i.e. The part owner "gives" his share away without expecting any money in return).

Things to take note:

  • This can only be done if the property is fully paid ( i.e. no more mortgage loan).
  • The CPF + accrued interest of the exiting party has to be refunded.
  • 3% Buyer Stamp duty is still payable based on the value of the property share.
  • Seller Stamp Duty (SSD) still applies if it is done within 4 years of the purchase of the property.
  • ABSD still applies to PRs and Foreigners.
  • This method is not encouraged because it will have negative implications when you are selling the property. Properties given away by Way of Gift will be affected by the Bankruptcy Act for the first five years. However, we've also seen cases of banks refusing to provide loans for properties which has been given away by "Way of Gift" even though it has been more than 5 years. This method can be considered an 'encumbrance' to the property.
B. Decoupling by Part Sale

Another option which is more commonly used and encouraged is decoupling by Way of Sale or decoupling by part sale.

This involves the selling of the shares owned by 2 individuals, to one of them. Similarly, the objective is to free one party to purchase another investment property as a first - timer, i.e. with an 80% loan and no A.B.S.D. ( for Singaporeans)

For example, a married couple, Mr A and Mrs B (both Singapore Citizens) owns a private apartment under joint tenancy. They can proceed to a lawyer to decouple, where Mr A sells his share of the unit to Mrs B. His half share would be valued at market value and Mrs A would typically 'purchase' it with a bank loan. If Mr B had utilized his CPF to service the earlier loan, his CPF and accrued interest would also be refunded ( i.e. included in the new loan that Mrs A takes up).

Things to note:

  • Normal fees and charges involving a sales transaction are applicable, i.e. the 20 % Downpayment (of which 5% must be in cash), lawyers fees, 3% Buyer Stamp Duty, stamp duty on loan etc will be applicable here.
  • As it is similar to the purchase and sale of a property, legally, this has to be done by 2 separate law firms.
  • If this is done within 4 years of the purchase date, Mrs A would also need to pay the Sellers Stamp Duty.
  • Duration of this process (or how long it takes) can be between 2 - 12 weeks.

Once the legal process is done, Mr A would receive his proceeds from selling his share and thus be eligible to buy another property in Singapore at 80% loan and without needing to pay the Additional Buyer Stamp Duty.

DECOUPLING FOR HDB FLATS ?

HDB Flats can also be transferred by way of gift or by part sale.

UPDATE : As of 1st April 2016, HDB has announced that transfer of ownership is no longer possible for married couples

We are in the process of confirming if  the transfer of ownership is still possible for other family nucleus.


However, there is a difference in procedures and calculations depending on if 

  • The HDB flat still has a mortgage loan
  • The Flat is bought using a HDB Loan or a Bank Loan. 

You will need to ensure that the owner who is taking owner sole ownership is able to take on the existing loan and repay the CPF of the exiting party but the calculation of the remainder of the loan and the cash amount needed depends on if you took a HDB loan or a Bank Loan. Depending on the agreement that you signed, the bank is more likely to request for a new valuation.  

However, HDB regulations and policies often change and so we would rather you contact us directly to see if it is a feasible arrangement for yourself.

You may also want to read a write up about HDB Decoupling by this blogger.

8. Are there any other ways apart from decoupling ?

A lawyer recently shared with us a method called the 99-1% method which is only applicable for BUCs (Building Under Construction). This involves the party who has to pay the ABSD buying over 1% of the shares in a subsale.

Take note that this method involves ​


  • 16% Sellers Stamp Duty on the 1%
  • Buyers Stamp Duty
  • ABSD on the 1%
  • Additional Lawyers Fees and they should be informed and prepped before you place any option fees or downpayments. 

 When calculations are done, this can result in significant savings. However, consult your lawyers prior to taking any action.  We may be able to assist in providing you basic details but only the lawyers will be able to provide you proper advice.

9. Which Development Should I buy?

If you have done your sums and it seems like a right time to select a property, you might want to check out our post on what to look out for before you purchase a property in Singapore. The post covers the differences and the Pros and Cons of Resale Condos, Condos that has recently TOP and condos still under construction. 

When putting that much money down for an investment property, you'd want some reassurance about your returns. We'd be able to help you do tax planning, restructure your portfolio and give advice on suggest undervalued properties so that you'll be able to benefit from the current market conditions. 

Sms us at 96918885 or email us at askus@PropertyRocking.sg to schedule an appointment today. ​

 

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Siti Zubeidah is a Marketing Director with ERA Realty Network Pte Ltd. (CEA No.: R050625J) She has a Bachelors Degree in Informations Communications and Sociology from the National University of Singapore (NUS) and a Masters of Mass Communications from Nanyang Technological University (NTU). With vast experience in the HDB market, Private and Landed Properties in Singapore, she is confident that she can assist you to make the correct decision regarding the purchase of your dream home as well as to get you the best price on the sale of your property. She can be contacted at 96918885 or at askus@propertyrocking.com.