How to avoid ABSD legally?
There are various ways to avoid ABSD, including:
Buy a commercial property: ABSD is not applicable for commercial properties so it makes a great option for those looking to invest.
Decoupling: For couples who jointly own a property, this means to transfer shares to spouse A so as to free up spouse B. Spouse B is then allowed to buy a second property under his/her name without having to pay ABSD. This is also one of the most popular options. However, you would need to take into account the various stamp duties and transaction costs of decoupling first, before deciding if this is the right option for you.
Buying a property under one name: For couples without an existing property, purchasing a home under one name provides the flexibility and opportunity for your spouse to buy a separate property in future without having to pay ABSD. However, do consider if a single spouse's CPF is sufficient to pay the downpayment and monthly mortgage before doing so!
Sell your existing house before purchasing a new one: To avoid ABSD, you would need to enter into a contract or agreement to sell your existing house, before entering into an Option to Purchase your new house.
Buy under a child's name: Get your child to buy mum/dad a new home! For this, make sure your child is 21 or older and a first-time home buyer. This way he/she would not have to pay the ABSD. However using this method means that it might restrict the child from buying a HDB or a marital home in future.
Purchase under a trust: If you have a lot of cash on hand, you can buy a property under your child’s name through a trust. Why do you need a lot of cash? Because banks do not lend mortgages to properties purchased under a trust. This method also means that the property belongs to your child. To purchase under a trust, your child has to be under 21 and the process would need to be done through a lawyer.
Dual key unit: A dual key unit is (legally) a single property that comprises two apartments side by side. It is a smart way to own two units that are connected, with the ability to provide for multi-generation living or to rent out one unit.
- ABSD remission for a married couple, including a Singapore Citizen spouse
- Joint Purchase by a married couple who do not own any residential property: Full ABSD remission may be applicable to a married couple who purchases a residential property jointly. The couple must include a Singapore Citizen (SC) spouse and the property must be purchased under both names of the couple only.
- Joint Purchase of second residential property by a married couple: ABSD remission may be applicable to a married couple who purchases a second residential property jointly, if the remission conditions are met. The couple must include a SC spouse and the property must be purchased under both names of the couple only. The conditions under the Stamp Duties (Spouses) (Remission of ABSD) Rules are as follows:
- The married couple did not own interest in more than one residential property at the date of purchase of the second residential property.
- ABSD has been paid on the second residential property.
- The first residential property (co-owned or separately owned) is sold within 6 months after
- the date of purchase of the second property for completed property or
- the issue date of the Temporary Occupation Permit (TOP) / Certificate of Statutory Completion (CSC), whichever is earlier, if the property was uncompleted at the time of purchase
- The married couple remains married and there is no change of ownership in the second residential property at the time of sale of the first residential property.
- The married couple has not purchased or acquired any other residential property since the purchase of the second residential property.
- The application for refund of ABSD is made within 6 months after the date of sale of the first residential property.
Buying an Executive Condo (EC): When you buy an EC you don’t have to pay ABSD upfront, unlike private condos which relies on a refund. However, you would still need to sell your current home within 6 months.
Foreigners with FTA: Foreigners under the Free Trade Agreement (FTAs) are given the same stamp duty treatment as Singapore citizens. Which means they don't have to pay ABSD for when buying their first residential property and enjoy lower rates of ABSD when buying second and subsequent residential properties. The countries under the FTAs include Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland and Nationals of the United States of America.
