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What Is the 99-to-1 Property Share Split And When Is It Illegal?

There’s a difference between tax planning and tax avoidance.


There are many forms of taxes levied on residential properties in Singapore. They can be small and recurring like the property taxes or large and one-off like the stamp duties. Fortunately, we can avoid some of them, while generally we may not for others.

One such type of tax that is both large enough to impact our purchasing decision and can also be avoided is the Additional Buyer’s Stamp Duty (ABSD). Introduced in December 2011 as a way to moderate demand for residential property, the ABSD rates were once again raised in 16 December 2021. As a result, Singapore citizens who now buy their second or third residential property have to pay an ABSD of 17% and 25% of the purchase price, respectively.

Given the hefty price tag of private properties these days, the ABSD can be a big burden for those who wish to own multiple properties. Unsurprisingly, the real estate investment community has shared the different possible ways that an investor can avoid the ABSD. One such method that has been most misunderstood over the past few years is the 99-to-1 property share split.

Recap on Types Of Property Ownership: Joint Tenancy And Tenancy-In-Common

Before we touch on the 99-to-1 concept, it’s important to understand the manner of holding a property in Singapore.

Generally, we can hold our property in one of two ways. The first way is through joint tenancy. Under this manner of holding, both parties hold an equal 50/50 share of the property. This structure is commonly used by couples because it allows the surviving co-owner to inherit the entire property without the need for a will upon the death of the other owner.

The second way is by tenancy in common. Under this structure, each of the co-owners (assuming two) owns a separate and specific number of shares in the property. This could be a split of any ratio (eg., 70/30 or 99/1 ownership) between two co-owners. Under this manner of holding, the shares of a co-owner who passes away will not automatically pass on to the remaining co-owners. Instead, the interests of the deceased would be distributed according to his will or as per the provisions of the Intestate Succession Act.

To utilise the 99-to-1 concept, property buyers have to use the tenancy in common as the manner of holding their property.

Read Also: Tenancy In Common VS Joint Tenancy: Pros & Cons Of Each Option And Which Should You Choose For Your HDB Flat

How Is The 99-To-1 Transfer Being Used?

The 99-to-1 homeownership strategy is usually used by an existing property owner (hereon referred to as the “existing owner”) to buy a second or third property with the intention of avoiding paying the full ABSD. The existing owner will team up with a close relative, like a spouse or child, who does not own any residential property by getting them to front the new property purchase.

However, the new property owner (hereon referred to as the “new buyer”) may not have sufficient financial means to service the mortgage on his own. Hence, the new buyer would then sell a 1% stake upon the purchase of the new property to the existing owner, who would then be able to co-finance the property.

Through this 99-to-1 transfer of ownership, the existing owner only pays ABSD on the 1% stake, versus the full sum on the total purchase price had he co-owned the new property from the start. For example, if the property cost $1.5 million, the existing owner would have to pay the full ABSD of $255,000 (17%) or $375,000 (25%), had he co-owned the property at the start. However, with the 99-to-1 transfer of ownership, the existing owner pays an ABSD of $2,550 (17%) or $3,750 based on the 1% share.

ABSD Applies Based On Property Count And Not Based On Specific Ownership Interest

Unfortunately, it’s a misconception that the ABSD only applies to the percentage of share ownership. In fact, the Inland Revenue Authority of Singapore (IRAS) states that “as long as a buyer owns any interest in a property, that property will be included in the count of properties owned by him.”

In other words, the ABSD takes into account the number of properties in which you have an interest, regardless of the percentage. For instance, from our earlier example, the existing owner has to pay the full ABSD of $255,000 (17%) if it’s his second property interest or $375,000 (25%), if it’s his third or subsequent property interest on his 1% stake.

Not doing so, may amount to tax avoidance, which will not only require the repayment of the outstanding ABSD but will also incur a 50% surcharge. In more serious cases where there’s an intention to evade taxes, it could even lead to a penalty of up to 400% of the amount of tax undercharged.

How To Use the 99-to-1 Share Ownership Above Board

That’s not to say that the 99-to-1 strategy is illegal. In fact, it can be a useful strategy for first-time couples, as it allows them to get a bigger loan quantum based on the Total Debt Servicing Ratio (TDSR) of 55% and to easily decouple to own a second property without incurring ABSD. Since they are both first-timers, they will not incur any ABSD on the purchase of the property; therefore, the manner of holding does not affect them.

Typically, the person holding the 1% share must be the one with greater financial means because they would have to be able to finance the second property on their own.

Once the couple is ready to commit to the second property, they could decouple, with the person with the 99% share buying out the remaining 1% share. The usual stamp duty for a property transaction would apply here, but given the small stake, it would be nominal.

With this move, the other person would be freed up to legally purchase the second property without incurring ABSD. Unlike the Sell-One-Buy-Two strategy, with this method, you don’t need to sell your first property (i.e., primary residence) to buy your next two properties (i.e., primary residence+investment property).

Read Also: 5 Potential Pitfalls To Know Before Decoupling To Buy A Second Property In Singapore

Other Considerations To Note Before Using The 99-To-1 Strategy

As with any strategy, there are potential risks that we must understand before using them. Here are a few considerations to take note:

Person Buying The Share Over Must Have The Ability To Repay And Finance Property

The person with the 99% share must have the ability to repay the amount that the other 1% co-owner paid, including any CPF funds used and accrued interest. If the property is not fully paid, then, the person must be able to restructure the remaining loan amount and finance the property on his own after acquiring full ownership of it.

Two-Way Conveyancing Fees

When decoupling under the 99-to-1 strategy, both owners would need to engage separate lawyers to complete the transaction. That would mean incurring more in conveyancing fees and a higher total cost.

Establish Legal Ownership

Property owners who use tenancy in common as their manner of holding, must establish their wills so that their interest in the property would be assigned to the intended beneficiaries if anything happens to them. Otherwise, their shares in the property will pass on to their family members according to the Intestate Succession Act.

Read Also: Additional Buyer’s Stamp Duty (ABSD): How Much You Have To Pay To Own Multiple Properties & 5 Ways To Avoid ABSD

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