The Additional Buyer Stamp Duty (ABSD) is probably one of the most hated acronyms among all Singaporeans, after COE and ERP. After the latest round of cooling measures, where the ABSD rates were raised from 7% to 12% for Singaporeans buying their 2nd residential property, many home buyers were probably scratching their heads to search for solutions on how to avoid ABSD in Singapore (of course legally).
So if you are looking to avoid ABSD in Singapore, we are about to introduce some workarounds that Little Red Dot Property team assist home buyers have done so far.
De-coupling in layman term mean removing one spouse from the ownership of the jointed first property, so that you can “free up” one name to purchase another property without incurred any ABSD. Technically mean that you will be buying over your partner’s share of the property, or vice versa. The transfer of ownership will be done through a Sales and Purchase agreement (S&P in short) and this will have to be stamped. So normal buyer stamp duty will have to be paid based on the purchase price (or the market value, whichever is higher) of the share of the property. Do note that all CPF of the party to be transfer and accrued interest have to be refunded as well. However, this criteria can be fulfill if both parties are having income to support or top up with cash if any shortfall. Do note de-coupling is not allow in HDB unit.
2. Using Trustee to purchase
This method purchasing property via Trustee is commonly use by wealthy families that use their children’s name to purchase additional properties without having to pay the ABSD (in this case consider the child’s first property). However, using Trustee mean you will have to pay ONLY cash to do so, no bank will grant you a loan for trustee. Do note that for trustee purchase, there is also a bankruptcy act which bind the trustee to the property for a period of 5 years. Technically to say for properties under Trustee, there is a period of 5 years to fulfill before they can sell in open market.
Recently, there is a concern about rising number of “returned units” at some new launches. For most new projects with progressive payments, the buyer will have to pay 5% of the purchase price as a booking fee. After which if the buyer decided not to exercise, 25% of the booking fee may be forfeited and the unit will have to be returned to the developer.
With many complex cases these days, for example buyers need more time to sell existing property etc. Developers do allowed the option to purchase (OTP) to be re-issue after expire date, without any forfeiting of the booking fee. This allow more time for genuine buyers to do the necessary documents before exercising the OTP.
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This review is solely done by Littlereddotproperty.sg. All information, calculations, charts and plans are current at the time of publication and are subject to change. All facts & figures are believed to be accurate as much as possible using various real estate subscribed tools but shall not be regarded as statements or representations of fact.