Avoiding Additional Buyer’s Stamp Duty in Singapore: A Comprehensive Guide

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How to Skilfully Dodge Extra Costs on Property Purchase
How to Skilfully Dodge Extra Costs on Property Purchase

ABSD in Singapore: How to Skilfully Dodge Extra Costs on Property Purchase

Navigating the Additional Buyer’s Stamp Duty (ABSD) in Singapore’s property market is crucial for buyers and investors. ABSD is a tax imposed on certain property purchases, introduced to regulate the market and discourage the speculative buying of multiple properties. The rate of ABSD varies based on whether you’re a Singapore Citizen, Permanent Resident, a foreigner, or buying under an entity, and these rates have undergone significant changes as of 2023.

For Singapore Citizens, ABSD applies from the second property purchase, while Permanent Residents pay this duty from their first property. Foreigners and entities face higher rates, reflecting the government’s focus on housing affordability for locals.

Understanding ABSD is essential for effective financial planning and investment in the property market. It influences decisions for first-time buyers, seasoned investors, and everyone in between. Knowledge of ABSD can impact your property goals and investment strategies.

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Understanding ABSD in Singapore's Property Market

ABSD: A Key Tool in Property Market Regulation

The Additional Buyer’s Stamp Duty (ABSD) in Singapore is more than just a tax; it’s a regulatory tool designed to stabilize the property market. Introduced to curb speculative buying and accumulation of multiple properties, ABSD helps ensure a sustainable market in a land-scarce nation. Its role is crucial in maintaining balance and affordability in the property sector.

2023: A Year of Significant Changes in ABSD Rates

Recent adjustments in 2023 have marked a significant shift in ABSD rates. These changes are not mere tweaks in taxation but strategic moves to fine-tune the property market, ensuring it caters to a wide range of the population. Understanding these changes is vital for anyone involved in the property market, as they have a direct impact on investment decisions and financial planning.

Impact on Different Buyer Categories

1. Singapore Citizens: For Singapore Citizens, the ABSD is applicable from the second property purchase, with the rate now at 20% for the second property and 30% for the third and subsequent properties. This tiered approach reflects the government’s commitment to making first homes more accessible while moderating investment-driven purchases.

2. Permanent Residents: Permanent Residents face ABSD from their first property purchase, starting at 5%. The rate increases to 30% for the second property and 35% for any additional properties. This structure aims to prioritize housing for Singapore Citizens while still allowing PRs to invest in property.

3. Foreign Buyers and Entities: Foreign buyers now face a 60% ABSD on any residential property purchase in Singapore. Entities, including companies and trusts, are subject to a 65% ABSD. These steep rates are intended to regulate foreign investment and corporate ownership in the local property market, ensuring priority for local residents.

In conclusion, the ABSD is a dynamic component of Singapore’s property market, with its varying rates for different buyer categories reflecting the government’s proactive approach to market management. Whether you’re a local resident, a foreign investor, or buying under an entity, staying informed about ABSD is essential for making informed property decisions.

Legal Strategies to Avoid ABSD

1. Decoupling: A Strategic Transfer of Ownership

Decoupling is a legal method where one property owner transfers their share to another, effectively becoming a sole owner. This strategy is often used by couples to avoid ABSD on a second property purchase. The process involves one partner transferring their share to the other, who then becomes the sole owner. However, this comes with financial implications such as the need to pay Buyer’s Stamp Duty (BSD) on the transferred share and potentially Seller’s Stamp Duty (SSD) if the property is sold within a certain period. Additionally, there are conveyancing fees to consider. Decoupling is primarily applicable to private property owners and requires careful financial planning.

2. Buying Under Trust for Children

Purchasing property under a trust for children is another strategy to potentially avoid ABSD. In this arrangement, the property is legally held in trust for the child, which may initially require payment of ABSD. However, under certain conditions, this ABSD may be refundable. It’s important to note that properties bought under trust are ineligible for bank loans, and the child cannot apply for a HDB flat. This option requires careful legal and financial planning to ensure compliance with the conditions for ABSD refund.

3. Investing in Commercial Properties

Commercial properties offer an attractive alternative as they are exempt from ABSD. These properties often yield higher rental returns compared to residential properties. However, they generally come with higher purchase costs and are subject to Goods and Services Tax (GST), which adds to the initial investment.

4. Purchasing Dual-Key Units

Dual-key units are unique as they are considered a single property but feature two separate living spaces. This setup allows owners to avoid ABSD for a second property and offers rental income opportunities while maintaining privacy. However, dual-key units typically have a higher price per square foot compared to standard units.

5. Sole Ownership Strategy

In this approach, one spouse is designated as the sole owner or essential occupier of the property. This strategy can be beneficial for couples looking to purchase a second property, as the non-owning spouse can potentially buy another property without incurring ABSD. However, this means the non-owning spouse cannot use their CPF for the first property. In case of disputes or divorce, the non-owning spouse may face legal challenges since they don’t hold ownership of the property.

6. Exploring Industrial and Commercial Investments

Investing in industrial and commercial properties can be a smart move to diversify your portfolio and avoid ABSD. These properties often come with different risk and return profiles compared to residential properties and can offer higher rental yields. However, they require a different investment approach and understanding of the market.

7. Property Purchase Under a Trust for Children

Buying a property under a trust for your children can be a way to avoid ABSD. The property is legally owned by the child, potentially exempting you from ABSD. However, this method requires careful legal structuring to ensure eligibility for ABSD refund and comes with its own set of financial implications.

8. Decoupling: Navigating the Legal and Financial Aspects

Decoupling involves transferring property ownership between co-owners, often used by couples to avoid ABSD on additional properties. This process has its costs, including BSD, SSD, and conveyancing fees. It’s crucial to ensure that the costs of decoupling don’t outweigh the potential savings from avoiding ABSD. Legally, decoupling is a form of tax avoidance, which is different from tax evasion. It’s important to approach this strategy within the legal framework to avoid any legal complications.

In summary, while there are several strategies to legally avoid or minimize ABSD in Singapore, each comes with its own set of considerations and implications. It’s crucial to understand these thoroughly and seek professional advice to make informed decisions in your property investment journey

Case Studies and Examples: Navigating ABSD in Real-Life Scenarios

Case Study 1: Successful Decoupling

John and Mary, a married couple, owned a condominium jointly. When they decided to invest in a second property, they faced a potential 20% ABSD. To avoid this, they opted for decoupling. John transferred his share of the condo to Mary, making her the sole owner. John then purchased the second property under his name, thereby avoiding ABSD. However, they incurred BSD on the transfer and legal fees for the process. This strategy was financially viable as the costs incurred were significantly lower than the ABSD they would have paid.

Case Study 2: Investment in Commercial Property

Alex, an avid investor, was looking to expand his portfolio without incurring ABSD. He chose to invest in a commercial property. By doing so, he not only avoided the ABSD but also tapped into higher rental yields. The initial investment was higher due to the property’s cost and GST implications, but the long-term returns and tax savings made it a worthwhile investment.

Case Study 3: Utilizing a Trust for Children

Sarah and Tom decided to buy a property under a trust for their child, Ben. They paid the ABSD upfront but applied for a refund under the specific conditions that the trust was irrevocable and Ben was the identifiable beneficiary. This strategy required substantial upfront capital since bank loans were not an option for trust properties. However, it allowed them to invest in property without additional ABSD, keeping in mind the long-term benefits for their child.

Case Study 4: Buying a Dual-Key Unit

Emma, a single professional, purchased a dual-key unit as her first property. This unique property type allowed her to live in one unit while renting out the other, generating rental income. She avoided ABSD as it was her first property and capitalized on the dual-key unit’s benefits, balancing investment with personal living space.

Each of these case studies demonstrates practical ways individuals have navigated around ABSD, considering both financial and legal implications. These real-life examples highlight the importance of strategic planning and understanding the nuances of property investment in Singapore. While these strategies offer solutions, they require careful consideration of one’s financial situation and long-term goals.

Weighing the Costs and Benefits: Is Avoiding ABSD Always Financially Savvy?

When it comes to navigating the Additional Buyer’s Stamp Duty (ABSD) in Singapore’s property market, the question often arises: does avoiding ABSD always equate to financial savings? The answer isn’t a straightforward ‘yes’ or ‘no’. It’s essential to weigh the costs and benefits carefully before jumping into any ABSD avoidance strategies.

Firstly, consider the immediate financial implications. Strategies like decoupling or investing in commercial properties might save you from paying ABSD, but they come with their own set of costs. For instance, decoupling involves paying the Buyer’s Stamp Duty and possibly the Seller’s Stamp Duty, along with legal fees. Similarly, commercial properties might not attract ABSD, but they do come with higher purchase costs and GST implications. It’s crucial to crunch the numbers to see if the savings on ABSD outweigh these additional expenses.

Another factor to consider is the long-term financial impact. Buying under a trust for your children or investing in a dual-key unit might seem appealing initially, but these decisions should align with your long-term investment goals and financial planning. For example, a dual-key unit might offer rental income, but it also comes at a higher cost per square foot. Is the potential rental income worth the extra initial investment?

Moreover, there’s the question of liquidity and flexibility. Some strategies might tie up your capital or limit your options in the future. For instance, if you buy a property under a trust for your child, it might limit their ability to purchase a property in their own right in the future.

While avoiding ABSD can lead to significant savings, it’s not always the most financially prudent option. It’s essential to consider both the immediate and long-term financial implications, along with how these strategies fit into your broader financial plan. As always, it’s wise to consult with a financial advisor or real estate expert to make an informed decision that aligns with your financial goals and circumstances.


As we wrap up our comprehensive guide on avoiding Additional Buyer’s Stamp Duty (ABSD) in Singapore, it’s clear that while there are several legal avenues to minimize or bypass this duty, each path requires careful consideration and expert navigation. From understanding the nuances of decoupling to evaluating the benefits of investing in commercial properties, the journey through Singapore’s property tax landscape is intricate and demands informed decision-making.

Remember, while these strategies can offer financial benefits, they also come with their own set of complexities and implications. It’s not just about avoiding a tax; it’s about making choices that align with your long-term financial health and real estate goals. Whether you’re a first-time homebuyer, a seasoned investor, or somewhere in between, the key is to approach ABSD with a strategy that fits your unique situation.

This is where the value of professional advice becomes indispensable. Our team of experienced real estate advisors is here to provide you with personalized guidance, helping you navigate the ABSD landscape with confidence. We understand the Singapore property market’s intricacies and are equipped to offer you tailored solutions that align with your investment objectives.

If you’re contemplating your next property move and want to understand how ABSD impacts your decision, don’t hesitate to reach out. Our advisors are ready to assist you with insights, advice, and strategies to make your property journey smooth and successful.

Contact us today to schedule a consultation and take the first step towards making informed and strategic property decisions in Singapore’s dynamic real estate market. Let’s navigate this journey together, ensuring your property investments are as rewarding as they are wise.

Frequently Asked Questions (FAQs)

ABSD is a tax imposed on certain property purchases in Singapore, primarily to regulate the property market and discourage speculative buying.

ABSD rates vary depending on the buyer’s status – Singapore Citizens, Permanent Residents, Foreigners, and Entities, with different rates applied from the first, second, or subsequent property purchases.

Yes, there are legal strategies such as decoupling, buying under trust, or investing in commercial properties that can help avoid or minimize ABSD.

Decoupling is the process where one co-owner of a property transfers their share to another, making them the sole owner. This can help the other party to buy a new property without incurring ABSD.

Yes, decoupling involves costs such as Buyer’s Stamp Duty, possibly Seller’s Stamp Duty, and legal fees.

This involves purchasing a property under a trust for your child, which may allow for ABSD refund under certain conditions but comes with its own set of financial and legal implications.

Yes, commercial properties are exempt from ABSD, though they have other costs like higher purchase prices and GST.

Dual-key units are properties with two separate living spaces but are considered one unit, potentially avoiding ABSD for a second property purchase.

Not necessarily. While avoiding ABSD can save money, the associated costs and long-term financial implications of the chosen strategy should be carefully evaluated.

For tailored advice, it’s best to consult with a real estate professional or advisor who understands the nuances of Singapore’s property market and ABSD regulations.

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