Purchasing a second property in Singapore can be challenging, especially with the Additional Buyer’s Stamp Duty (ABSD) significantly raising costs. Learning how to avoid ABSD can make a substantial financial difference. This guide will explain effective methods for buying a second property in Singapore without ABSD and avoiding ABSD in Singapore.
Understanding ABSD
The ABSD was introduced by the Singapore government as part of its property cooling measures to control escalating property prices. For Singaporean citizens, ABSD applies when purchasing a second property, with rates starting from 12% of the purchase price or market value. Permanent Residents and foreigners face even higher rates.
Effective Methods to Avoid ABSD in Singapore
There are several strategies that can help potential buyers mitigate or avoid ABSD costs when purchasing additional properties in Singapore.
Decoupling Property Ownership
One popular method of avoiding ABSD in Singapore is through decoupling. This involves transferring one’s share of the property to their spouse. By doing so, one spouse ends up owning the existing property entirely, freeing the other spouse to purchase a new property without incurring ABSD.
Buying Under a Child’s Name
Another strategy for how to buy a second property in Singapore without ABSD is to purchase the property under the name of a child who has reached the legal age of 21. This approach only works if the child does not already own any property, as the first property purchase is exempt from ABSD for Singaporean citizens.
Joint Ownership with Family Members
Forming a partnership with family members who do not yet own property can also work. By listing the new property jointly under family members, who are first-time buyers and eligible for ABSD exemption on their first purchase, a significant reduction in total ABSD can be achieved.
Purchasing Commercial Properties
Read more about Avoiding ABSD Singapore here.
ABSD is not applicable to commercial properties. Investors considering commercial spaces can thus avoid any ABSD costs. This is an attractive alternative for those looking to diversify their property portfolio in Singapore.
Trust Arrangements
Creating a trust for a child or family member can be another method to acquire property without incurring ABSD. The property is purchased under the trust, with specific terms detailing the beneficiary, often a child who meets the first-time buyer criteria. However, legal consultation is recommended to navigate the complexities involved in this process.
Important Considerations
Each method comes with its unique set of advantages and potential pitfalls. It’s imperative to seek professional advice from property consultants, lawyers, or financial advisors to evaluate the most suitable strategy for your specific circumstances.
Mastering how to avoid ABSD and understanding the nuances of the Singapore property market can lead to significant savings. Utilizing these strategies effectively allows savvy investors to buy a second property in Singapore without ABSD, ensuring they maximize their investment returns.
Conclusion
Diversifying property holdings without incurring ABSD in Singapore requires strategic planning and professional guidance. Exploring options such as decoupling, purchasing under a child’s name, joint ownership, investing in commercial properties, and establishing trust arrangements can provide viable pathways to achieving this goal.
