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

It pays (several hundred thousand dollars literally) to think hard about ways to avoid ABSD.


The Singapore government announced its latest set of property cooling measures on 15 December 2021 – which will come into effect immediately on 16 December 2021. As part of the strategy to curb speculation in the property market and, in effect, property prices, the Additional Buyer’s Stamp Duty (ABSD) was raised. The ABSD was first introduced in 2011 as a property cooling measure, and was last raised in 2018.

This should not have come as a surprise as talks of a further round of property cooling measures have persisted on the back of strong property prices. This is especially as Singapore braced against the worst recession on record, witnessing median wages falling for the first time in more than 15 years, in 2020.

In fact, private property prices increased 5.3% in the first three quarters of 2020, after rising 2.2% in 2020 and 2.7% in 2019. Even HDB resale home prices – having been relatively sluggish in recent years – have increased 9.1% in the first three quarters of 2021, after increasing 5.0% in 2020.

In this article, we look at how much ABSD we have to pay when buying a second investment property or even upgrading from our current property.

Read Also: New Property Cooling Measures: 4 Things That Home Buyers Need To Know Before Buying Their Next Home

We Need To Pay A Buyer’s Stamp Duty (BSD)

When we buy a residential property in Singapore we have to pay a Buyer’s Stamp Duty (BSD). Only if we are purchasing our second or subsequent property, we need to fork out the Additional Buyer’s Stamp Duty (ABSD). The ABSD is a separate tax on top of the BSD.

Buyer’s Stamp Duty:

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%

 

How much we have to pay in Buyer’s Stamp Duty or BSD is dependent on the value of our home. We don’t just pay more for a more expensive home, but also incur a higher tax level.

How Much Is The ABSD In Singapore?

If we are buying our second or subsequent residential property, we have to fork out for the Additional Buyer’s Stamp Duty (ABSD).

It’s also slightly more complicated than calculating the Buyer’s Stamp Duty (BSD) that we have to pay. Rather than based on the incremental value of our property, it’s based on the profile of the buyer, with a flat ABSD rate slapped on the entire purchase price of the property.

Profile of the Buyer Additional Buyer’s Stamp Duty (ABSD)
[BEFORE 16 December 2021]
Additional Buyer’s Stamp Duty (ABSD)
[AFTER 16 December 2021]
Singapore Citizens  
Singapore Citizen buying 1st residential property No ABSD No ABSD
(no change)
Singapore Citizen buying 2nd residential property 12% 17%
(increase of 5 percentage points)
Singapore Citizen buying 3rd and subsequent residential property 15% 25%
(increase of 10 percentage points)
Singapore Permanent Residents  
Singapore Permanent Resident buying 1st residential property 5% 5%
(no change)
Singapore Permanent Resident buying 2nd residential property 15% 25%
(increase of 10 percentage points)
Singapore Permanent Resident buying 3rd and subsequent residential property 15% 30%
(increase of 15 percentage points)
Foreigners  
Foreigners buying any residential property 20% 30%
(increase of 10 percentage points)
Entities  
Entities buying any residential property 25% + Additional 5% for Housing Developers 35% + Additional 5% for Housing Developers
(increase of 10 percentage points)

* Housing Developers may apply for remission of the ABSD rate, but not for the additional 5% they pay.

 

Singapore Citizens don’t have to pay any ABSD for their first private residential property purchase. However, we have to pay an ABSD of 17% for our 2nd residential property and 25% for our 3rd residential property.

Singapore Permanent Residents and Foreigners have to start paying ABSD from their 1st private residential property purchase. Permanent Residents have to fork out 5% ABSD for their 1st residential property purchase. Subsequently, they have to pay 25% ABSD for their 2nd residential property and 30% for their 3rd residential property.

Foreigners have to start paying 30% ABSD from their 1st residential property purchase.

Read Also: How Much Buyer’s Stamp Duty And ABSD Singaporeans, PRs And Foreigners Need To Pay – And When

How To Avoid The ABSD?

As we can see, the ABSD can be an immensely substantial amount that we have to fork out when we buy another residential property. For example, anyone who invests in a condominium for $1.5 million today, will have to pay $44,600 in BSD. On top of this, the person will have to fork out another $255,000, since this is for investment purposes and they likely own and live in another residential property.

Naturally, people are going to try to find ways to get around it. There are certain ways we can do this (legally).

#1 Any ABSD We Pay Can Be Subsequently Reimbursed With CPF OA Balances

Technically, this isn’t “avoiding” ABSD. It is just avoiding ABSD payment with cash.

When we pay for the ABSD, we typically need to fork out for it in cash first. This makes it even more painful, even if we can afford it in our CPF balances or have no intention to hold two properties because we are selling our existing property.

We can only apply to use our CPF OA balances for the ABSD (and BSD), and get reimbursement from our CPF for the sum we paid in cash afterward.

#2 Sell Existing Residential Property First, Then Buy Next Residential Property

It can be quite prohibitive to buy another home without selling our existing home, even if the intention is to do so. This is because we have to pay the ABSD before being able to apply for an ABSD refund or remission. For example, the ABSD on a $1 million private residential property will be $170,000 at the lowest (e.g. Singapore Citizen couple buying another home to move into).

Another important thing to note is that applying for the ABSD remission only applies to married couples, who jointly purchase their next residential property. This basically means singles or unmarried couples cannot apply for ABSD remission if they purchase their next residential property without selling their existing residential property. Married couples must also purchase their next property under both names of the couple only.

The obvious workaround is that we should sell our existing property first, before buying a new property. Timing the purchases can be tricky, so we need to be very careful when planning it this way. Alternatively, we can always sell our home, move to a rented property for a period of time, before buying our next home.

Read Also: HDB Buyers & Upgraders: Two Unintended Groups Who Could Be Affected By The Latest Property Cooling Measures

#3 Decoupling

Another main reason we think about trying to avoid the ABSD is because we want to own two private residential properties as a couple rather than one.

By selling our residential property first, we can also consider de-coupling our names from our spouses to purchase one residential property under each couple’s name, without paying any ABSD.

Decoupling can also apply to private property owners who remove one of the spouse’s names from the property. Technically, this involves one spouse buying over the share of the other spouse. Once this is done, the spouse whose name has been decoupled is free to purchase another property without having to pay any ABSD.

However, when doing this, the spouse who buys over the property must be able to refund the CPF monies that their spouse used, and they also have to take into consideration additional costs such as the Buyer’s Stamp Duty (BSD) portion of the transaction and lawyers’ fees. When purchasing another private residential property under the other spouse’s name, other factors such as whether they are able to get the required home loan as a sole buyer also matters.

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

If we cannot afford to buy two residential properties immediately, we can consider buying one, but with only one person’s name. In effect, this allows us to de-couple ahead of time. And, when we can afford it, we can use the second spouse’s name to purchase the 2nd property without ABSD in future. This will likely give us more time to accumulate sufficient savings to pay a downpayment for the 2nd property when the time comes.

#4 Apply As A Married Couple With One Singapore Citizen Spouse

Couples with at least one Singapore Citizen spouse can apply for ABSD remission. This means Singapore Citizens who marry a permanent Resident or Foreigner will not be penalised in owning their own home in Singapore.

If we are intending to get married to a Permanent Resident or a Foreigner, there’s no need to wait until they get their citizenship or PR status to enjoy lower ABSD rates.

#5 Foreigners Eligible For ABSD Remission

While it may be far-fetched to change citizenship or permanent residency status just to enjoy ABSD remission, nationals or permanent residents of certain countries are accorded the same Stamp Duty treatment as Singapore citizens.

Nationals and Permanent Residents of Iceland, Liechtenstein, Norway and Switzerland, as well as Nationals of the USA are given this privilege under the respective Free Trade Agreements (FTAs) we have with them.

What this means is that they do not have to pay ABSD for their first private property purchase. Quite counterintuitively, Permanent Residents of Iceland, Liechtenstein, Norway and Switzerland do not have to pay ABSD for their first private residential property in Singapore, while Singapore Permanent Residents have to pay 5% for their first private residential property.

Purchasing Other Types Of Property Investments In Singapore

To avoid paying for ABSD, but still invest in multiple properties in Singapore, we can consider buying a commercial or industrial property. We can also consider investing in a popular asset class on SGX – REITs.

Read Also: Investing in Property VS REITS: Which is Better

Here’s an infographic summarising the ways you can legally avoid Additional Buyer’s Stamp Duty (ABSD)

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