When we buy a property in Singapore, we have to pay a tax for the documents executed in relation to the transaction. This tax mainly comprises the Buyer’s Stamp Duty (BSD) and, if we are liable, an Additional Buyer’s Stamp Duty (ABSD) for residential properties.
How Much Is The Buyer’s Stamp Duty (BSD)?
The Buyer’s Stamp Duty (BSD) is taxed based on the purchase price or market value, whichever is higher, on all property purchases in Singapore. This includes both residential and non-residential properties.
|Purchase Price or Market Value of Property||Buyer’s Stamp Duty (BSD) for Residential Properties||Buyer’s Stamp Duty (BSD) for Non-Residential Properties|
|Next $1.5 million||5%||5%|
|Amount exceeding $3 million||6%||5%|
As you can see the BSD is taxed at an incremental rate based on the purchase price or market value of the home. This way, those who are able to afford more expensive homes will end up paying a higher BSD, while those who purchase less expensive homes pay less.
The BSD is also levied at a slightly different rate for residential properties and non-residential properties. The BSD for residential property purchases can go as high as 6%, while BSD for non-residential property purchases is capped at 5%. This was recently adjusted for properties purchased from 15 February 2023.
For a quick mental calculation, the first $360,000 of our home value will be charged at $5,400, the first $1 million will be charged at $24,600, the first $1.5 million will be charged at $44,600, and the first $3 million will be charged at $119,600. So, for example, if we purchase a home worth $500,000, we need to pay $5,400 + $4,200 ($140,000 X 3%), which is $9,800. Similarly, if we purchase a home worth $2 million, we need to pay $44,600 + $25,000 ($500,000 X 5%), which is $69,600.
What Is The Additional Buyer’s Stamp Duty (ABSD)?
The Additional Buyer’s Stamp Duty (ABSD), as its name suggests, is paid on top of the Buyer’s Stamp Duty (BSD). This only affects residential property buyers. Typically, it is for Singaporeans buying their second and subsequent residential property, as well as for PRs and foreigners buying their first home in Singapore.
First introduced on 8 December 2011, the ABSD is one aspect of a slew of cooling measures implemented since 2009 to curb speculative demand for residential properties in Singapore. Arguably, it has been one of the most “painful” property cooling measures as it potentially increases our home purchase cost by a whopping 12% to 20%. Furthermore, the ABSD has to be paid lump sum.
|Profile of the Buyer||Additional Buyer’s Stamp Duty (ABSD)
[FROM 16 December 2021 TO 26 April 2023]
|Additional Buyer’s Stamp Duty (ABSD)
[FROM 27 April 2023]
|Singapore Citizen buying 1st residential property||No ABSD||No ABSD
|Singapore Citizen buying 2nd residential property||17%||20%
(increase of 3 percentage points)
|Singapore Citizen buying 3rd and subsequent residential property||25%||30%
(increase of 5 percentage points)
|Singapore Permanent Residents|
|Singapore Permanent Resident buying 1st residential property||5%||5%
|Singapore Permanent Resident buying 2nd residential property||25%||30%
(increase of 5 percentage points)
|Singapore Permanent Resident buying 3rd and subsequent residential property||30%||35%
(increase of 5 percentage points)
|Foreigners buying any residential property||30%||60%
(increase of 30 percentage points)
|Entities buying any residential property||35% + Additional 5% for Housing Developers||65%
(increase of 30 percentage points)
Housing Developers: 35% + Additional 5% for Housing Developers
* Housing Developers may apply for remission of the ABSD rate, but not for the additional 5% they pay.
Unlike the BSD, the ABSD is a fixed percentage of the entire property price (and not levied incrementally). As depicted in the table above, how much ABSD we have to pay depends on whether we are Singapore Citizens, Permanent Residents (PRs), foreigners or buying as an entity, as well as the number of properties we already own under our name.
For example, a Singapore Citizen buying a second home have to pay an ABSD of 20%. If we are purchasing a second home worth $3.5 million, here’s what we need to pay:
|Type of Stamp Duty||Stamp Duty Rate||How much we have to pay|
|Buyers Stamp Duty (BSD)||1% x $180,000||$1,800||$149,600|
|2% x $180,000||$3,600|
|3% x $640,000||$19,200|
|4% x $500,000||$20,000|
|5% x $1.5 million||$75,000|
|6% x $500,000||$30,000|
|Additional Buyer’s Stamp Duty (ABSD)||20% x $3.5 million||$700,000|
The ABSD can be a very substantial amount, and as we can see, can add up to over 20% on top of the purchase price for a $3.5 million property.
The fact that we have to fork out the BSD and ABSD upfront in cash is another big hurdle. While we are able to apply for a reimbursement from CPF or get a refund after selling our first home (if we are eligible), we still need to have this amount in spare cash – and beyond what we already need to pay in downpayment and BSD. Furthermore, since the ABSD can be a very costly, we may not have enough in our CPF for the full reimbursement. Careful financial planning is required to ensure we have sufficient funds to make this payment.
Buyers should note that a full count will be applied whether we have full ownership, partial ownership or joint ownership of another property or properties.
Paying ABSD If You Buy Under A Trust
As of 9 May 2022, a higher rate of Additional Buyer’s Stamp Duty (ABSD) will apply on any transfer of residential property into a living trust. This rate was recently increased to 65%.
Prior to this, when a residential property is transferred into a living trust, Buyer’s Stamp Duty (BSD) is payable. Depending on the profile of the beneficial owner(s) of the residential property transferred into the trust, ABSD may also be payable. However, if the living trust is structured such that there is no identifiable beneficial owner at the time when the residential property is transferred into the trust, no ABSD was payable.
Following the 9 May 2022 change, ABSD (Trust) is to be payable upfront, when the residential property is transferred into any living trust. Eligible trustees may apply to IRAS for a refund of ABSD (Trust). This refund amount will be based on the difference between the ABSD (Trust) rate of 65% and the ABSD rate corresponding to the profile of the beneficial owner with the highest applicable ABSD rate. Trustees have six months to make the refund application after the instrument is executed.
When Do I Have To Pay The BSD And ABSD?
The BSD and ABSD are upfront costs that we have to pay when purchasing a property in Singapore. We should set aside this amount, as well as other upfront costs, when determining whether we can afford to buy a home.
The BSD and, if applicable to you, the ABSD has to be paid within 14 days from the date of the signed Contract or Agreement. Our documents for the home purchase will be considered to be duly stamped only when we have fully paid the stamp duty.
While this means we will typically need to pay for the BSD and ABSD upfront in cash, we can include this amount when applying for a one-time reimbursement from our CPF account, together with our application to use our CPF savings to buy the home. In short, we can pay for our BSD and ABSD with our CPF funds. Since the ABSD can be a very significant amount, we may not even have enough in CPF when applying for reimbursement.
Foreigners Eligible For ABSD Remission
Under the respective Free Trade Agreements (FTAs), Nationals and Permanent Residents of Iceland, Liechtenstein, Norway and Switzerland, and Nationals of the USA, are accorded the same Stamp Duty treatment as Singapore Citizens.
This means such foreigners will only have to pay the BSD when they purchase their first home in Singapore, and do not need to pay any ABSD. This is even better than the treatment of Singapore PRs buying a residential property in Singapore.
ABSD Refund For Married Couples Buying A Second Home Together
This refund is meant to avoid penalising married couples who want to move from one home to another, as it requires the couple to sell the first property which they own or co-own. There are many detailed scenarios, which involve residency status of spouses and the number of residential properties they co-own or individually own, that the Inland Revenue Authority of Singapore (IRAS) lists, which you can find here.
In general, the refund applies to:
- Married couples, with at least one Singapore Citizen spouse, who do not own interest in more than one home at the date of purchasing the second home together
- The first home is sold within six months after the date of purchase of the second home (for completed property) or the issue date of the Temporary Occupation Permit (TOP)/Certificate of Statutory Completion (CSC), whichever is earlier (for uncompleted property)
- Married couple remains married and there is no change in ownership of the second home at the point of selling the first home
- Married couple has not purchased or acquired other homes since the purchase of their second home
The application for the ABSD refund has to be made within six months after the date of sale of the first home.
In any case, we need to note that the ABSD still has to be paid upfront while we apply for the refund.
ABSD refunds on second home purchase only applies to married couples. Thus singles who purchase a second home, but sell off their first home within six months are not eligible to apply for an ABSD refund.
Similarly, this will not apply to couples who are seeking the sell-1-buy-2 strategy to own two residential properties after selling their homes. This is because there is a change in the ownership structure of the second homes. Couples intending to do this should sell their first property before purchasing their individual properties.
Another thing to note is that our residency status at the date of purchasing our home matters. Even if we are in the process of obtaining our Singapore Citizen or Singapore PR status, we still need to pay the applicable ABSD as at the date of purchase. We will be unable to apply for any ABSD refund regarding a new residency status after the date of purchasing our home.
Do I Have To Pay Buyer’s Stamp Duty (BSD) And Additional Buyer’s Stamp Duty (ABSD) For An Inherited Property
According to IRAS, we do not have to pay BSD or ABSD on a property we inherit in accordance to the Intestacy Law, Muslim Inheritance Law or a Will. This is regardless of the property value and/or how many properties we already own.
This article was first published on 3 August 2020 and updated with new information.
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