In Singapore, the Additional Buyer’s Stamp Duty (ABSD) is a tax levied on the purchase of residential properties. It was introduced to cool the property market and to curb foreign investments that could inflate property prices. The ABSD varies depending on the residency status and the number of properties owned by the buyer. Avoiding ABSD Singapore strategies can significantly impact your investment’s profitability.
Strategies on How to avoid ABSD in Singapore
1. Buying Under an Exempted Entity
Purchase the second property under a housing developer as these entities are exempted from ABSD during the first five years.
Note, this strategy may not be viable for individual buyers looking to own the property personally.
2. Decoupling Ownership
This involves one party selling their share of the jointly-owned first property, effectively allowing the other to purchase a new property without owning multiple properties.
Ensure to consider legal fees and eligibility for mortgage qualifications.
3. Investing Through a Trust
Buy the property in a child’s name under a trust, thus potentially avoiding ABSD.
Understand the costs and complexities involved in creating and managing the trust.
4. Buying as a Foreigner
Identify if you are from a country with a Free Trade Agreement (FTA) with Singapore. Citizens from these countries may enjoy certain ABSD exemptions.
Research thoroughly as policies can change and agreements complexities may arise.
How to buy second property in Singapore without absd
To successfully purchase a second property without incurring ABSD, it’s essential to navigate through legal avenues and strategic planning. Below are some frequently asked questions to guide potential buyers.
FAQs
Q: Can I avoid ABSD if I sell my first property before buying a new one?
A: Yes, selling your first property before purchasing a second one can help you avoid ABSD, as you will not be owning more than one property at any given time.
Q: Is there a legal age limit for buying property under a child’s name using a trust?
A: There’s no specific legal age limit, but consider the long-term implications and management of properties held under such trust contracts.
Q: What are the legal implications of decoupling ownership?
A: Decoupling involves legal processes and fees; consulting with a property lawyer is advisable to understand all ramifications and ensure compliance with local laws.
Q: Are Permanent Residents (PRs) subjected to ABSD?
A: Yes, PRs are subjected to ABSD, although at different rates compared to foreign buyers.
Conclusion
Investing in a second property in Singapore may seem challenging with the existence of ABSD, but well-informed strategies can make it possible. By understanding various avoiding ABSD Singapore methods like decoupling, utilizing exemptions, or leveraging trusts, investors can minimize additional costs and maximize their property investment returns. Always ensure due diligence and consult professionals where necessary to navigate the complexities of the property laws effectively.
