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Understanding the Additional Buyer’s Stamp Duty (ABSD)
The Additional Buyer’s Stamp Duty (ABSD) is a significant factor to consider when purchasing property in Singapore. Implemented as part of cooling measures for the property market, it is crucial to understand how to navigate these regulations effectively.
Strategies on How to Avoid ABSD in Singapore
1. Buying Under Different Names
For married couples, one strategy is to purchase properties under different names. The first property can be bought under one partner’s name, while the second property can be acquired in the name of the other partner, thus avoiding the ABSD for the second property.
2. Decoupling
Another popular strategy is decoupling. One partner transfers their share of ownership of the existing property to the other partner. Once the transfer is complete, the partner who no longer owns the first property can now purchase a second property without incurring ABSD.
3. Purchasing Commercial Property
ABSD does not apply to commercial properties. Investors can consider buying commercial property instead of residential property to completely avoid ABSD Singapore.
4. Buying Under a Trust for Children
You can purchase real estate under a trust in the name of children. This method often involves certain financial and legal considerations, but it serves as another route for buying a second property without ABSD.
5. Singapore Permanent Resident (SPR) Conversion
For foreigners, converting to Singapore Permanent Resident (SPR) status can reduce the ABSD payable. While this change may not completely eliminate the tax, it can considerably lessen the financial burden.
FAQs on Avoiding ABSD Singapore
What is the current ABSD rate?
The ABSD rates vary based on several factors including residency status and the number of properties owned. For detailed, up-to-date information, please refer to the Inland Revenue Authority of Singapore (IRAS) website.
Is decoupling legal?
Yes, decoupling is legal but involves various legal and stamp duty implications. It’s advisable to consult with a qualified property lawyer before undertaking this strategy.
Can companies buy properties without ABSD?
Companies registered in Singapore are subject to ABSD at higher rates for property purchases. However, specific exemptions or strategies may apply to mitigate these costs, so it’s best to consult with a property investment consultant for tailored advice.
Conclusion
The decision to invest in property requires careful planning and consideration of various tax implications. Employing the right strategies can significantly reduce these costs, allowing for a more profitable investment. Utilizing methods like decoupling, buying under different names, or considering commercial properties can help in how to buy second property in Singapore without ABSD.
