
The rate of home ownership in Singapore is very high, at 87.9%. However, the government has increasingly raised the barrier to owning a second residential property with numerous rounds of property cooling measures over the years. The most recent one was announced in mid-December 2021.
One of the most costly implementations has been the Additional Buyer’s Stamp Duty (ABSD). The ABSD requires us to pay up to 17% or 25% if we buy a second or third and subsequent residential property in Singapore. This is on top of the normal Buyer’s Stamp Duty (BSD) that we already have to already pay.
Read Also: New Property Cooling Measures: 4 Things That Home Buyers Need To Know Before Buying Their next Home
The Buyer’s Stamp Duty (BSD) rate that every residential property buyer has to pay is:
Purchase Price or Market Value of Residential Property | Buyer’s Stamp Duty (BSD) |
First $180,000 | 1% |
Next $180,000 | 2% |
Next $640,000 | 3% |
Remaining amount | 4% |
When we buy a second or subsequent residential property, we have to pay an Additional Buyer’s Stamp Duty (ABSD) rate – on top of the BSD – of:
Profile of the Buyer | Additional Buyer’s Stamp Duty (ABSD) [AFTER 16 December 2021] |
Singapore Citizen buying 1st residential property | No ABSD |
Singapore Citizen buying 2nd residential property | 17% |
Singapore Citizen buying 3rd and subsequent residential property | 25% |
Singapore Permanent Resident buying 1st residential property | 5% |
Singapore Permanent Resident buying 2nd residential property | 25% |
Singapore Permanent Resident buying 3rd and subsequent residential property | 30% |
Foreigners buying any residential property | 30% |
Another way to look at the ABSD is that the government does not intend to penalise Singaporeans and even Permanent Residents who only want to own one residential property. This usually happens when couples want to upgrade or downgrade, and purchase a second home property before selling away their first home.
Nevertheless, we have to pay the ABSD upfront if we are buying a second or subsequent residential property. The government then provides an ABSD remission or refund, when we eventually sell away our first properties.
What many of us may not fully be aware of is that even if we don’t intend to own multiple properties, we may not be eligible for the ABSD refund. Here are 4 situations we should understand.
#1 Owners Who Are Not “Married Couples” Are Not Eligible For ABSD Refunds
The ABSD refund is only available to married couples who are intending to upgrade or downgrade from their existing home. This is a special concession given as the government recognises that such families may need more space when their children are growing up or have to downsize when they are approaching their senior years. To be eligible, married couples have to sell their first property within 6 months after the purchase of their second home (or the TOP date of any uncompleted property).
What this also means is that other groups of property buyers, such as individuals, siblings or unmarried partners, are not eligible for ABSD refund even if they meet all the requirements placed on married couples.
#2 Couples Who Buy A Second Property, But Sell Their First Property After 6 Months
As mentioned above, getting an ABSD refund is a special concession that only married couples who sell their properties within 6 months of buying their second property enjoy.
This is a scenario that married couples need to pay close attention to – if they sell their first home after the 6-month timeframe that they have, they may not be eligible for the ABSD refund. This can be a very costly lesson.
The IRAS website spells it out very clearly that an extension of the time to sell the first property will not be acceded to. The only exception is the temporary relief measure due to COVID-19, which provided a 6-month extension of the sale timeline for married couples.
Read Also: How Much Buyer’s Stamp Duty And ABSD Singaporeans, PRs And Foreigners Need To Pay – And When
#3 Married Couples Who Buy A Third Property, And Sell Away One Of Their Properties (So That They Only Own 2 Homes)
The ABSD for a third property is a much more hefty 25%, compared to the 17% ABSD when buying a second property.
However, married couples cannot apply for an ABSD refund if they buy a third residential property, but sell off one of their other residential properties. I.e. even if the intention is to only own two residential properties rather than three, the full ABSD rate applies.
This also extends to the scenario where the married couple buy their third residential property before processing their ABSD refund for their second residential property. This means that even though they were initially eligible for the ABSD refund, they would no longer be eligible once they purchase the third residential property.
#4 Married Couples Who Decouple Or Implement A Sell-1-Buy-2 Strategy
One way that married couples can own two residential homes without paying ABSD is for each of them to fully own a residential property under each of their names.
There are two common ways to do this. In the first method, one of the spouses sell their share in the existing property to the other spouse. Their name is now freed up to purchase another property without having to pay the ABSD. Secondly, they can also sell their existing home and purchase two homes under each of their names separately.
However, if the married couple buys the second residential property without first selling the existing property, they will not be eligible for the ABSD refund.
The rules are very clear on this. The second residential property has to be purchased under “both names of the couple only”. This means they cannot buy the second property under just one of their names and still receive the ABSD refund. And it also cannot be purchased with other parties, such as their children.
Couples who try this without a full understanding of the rules will be in for a rude shock. The only way to implement these strategies is to sell the existing home (or decouple) first. Then only they should proceed to purchase the next residential property(ies).
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