Additional Buyer’s Stamp Duty (ABSD) in Singapore (2022): A Guide for Property Buyers

·11-min read
Additional Buyer’s Stamp Duty (ABSD) in Singapore (2022): A Guide for Property Buyers
Additional Buyer’s Stamp Duty (ABSD) in Singapore (2022): A Guide for Property Buyers

When you buy a property in Singapore, you’re subjected to Buyer’s Stamp Duty (BSD). And, depending on the criteria (i.e. your residency status and the number of properties you own), you may have to pay another type of tax, known as Additional Buyer’s Stamp Duty (ABSD).

The December 2021 cooling measures announced saw a revision of ABSD rates. Furthermore, as of 9 May 2022, the Ministry of Finance announced that any transfer of residential property into a living trust would be subject to an ABSD rate of 35%.

To keep you in the know, this guide will cover what ABSD in Singapore is, the ABSD rates, ABSD remission, ABSD for PRs, and ABSD for your 2nd property.

What Is Additional Buyer’s Stamp Duty (ABSD)?

ABSD in Singapore is a tax that’s levied on top of Buyer’s Stamp Duty (a tax that property buyers have to pay when they buy a property), and it’s computed based on the valuation or the selling price of the property, whichever is higher.

Who Needs to Pay ABSD in Singapore?

ABSD rates on properties apply to the following group of buyers:

  • Singapore Citizens: ABSD will be levied on the second (17%) and subsequent (25%) property purchases

  • Singapore Permanent Residents (PRs): ABSD for PR will be on all purchases, with ABSD rates starting from 5% for the first purchase. The second purchase will be 25%, and third and subsequent purchases will be at an ABSD rate of 30%.

  • Foreigners: 30% ABSD rate for any property purchase

  • Entities (companies or associations): 35% for each property (plus additional 5% non-remittable ABSD for developers)

Why Was ABSD Introduced?

Here’s a brief overview of ABSD in Singapore and the timeline of changes:

  • December 2011: ABSD was introduced to manage the surge in demand for property

  • January 2013: ABSD rates were increased, and more buyer profiles were included to be liable for the tax

  • July 2018: ABSD rates increased again

  • December 2021: ABSD rates were increased once more for second and subsequent purchases, for foreigners and entities.

ASBD was first introduced in December 2011 as a property cooling measure to discourage foreigners and entities from purchasing residential properties, especially multiple properties.

In other words, it was introduced to manage demand for residential properties and keep housing prices affordable for Singaporeans.

ABSD rates were increased further in January 2013, along with introducing new buyer profiles that would be liable for ABSD.

Property speculation dropped after ABSD was implemented, and foreign buyers who were interested in investing in Singapore’s property market were deterred by the high ABSD rates.

Then in July 2018, both the BSD and ABSD increased again, and additional cooling measures like the Total Debt Servicing Ratio (TDSR) and Seller’s Stamp Duty (SSD) saw the volume of property transactions drop rather significantly.

The latest round of cooling measures took effect on 16 December 2021. Aside from tightened loan limits which saw the Loan-to-Value (LTV) limit for HDB-granted loans being adjusted from 90% to 85% and the Total Debt Servicing Ratio (TDSR) threshold tightening, dropping from 60% to 55%, ABSD rates were adjusted.

Definition of “Residential Property” for ABSD

Before we talk about the adjusted ABSD rates, let’s understand what’s defined as “Residential Property”. Residential properties are those used as homes. The most obvious examples would include HDB flats, condominiums, bungalows, and terrace houses (and similar types).

Shophouses with living quarters, as well as HDB void deck shops that have an upper floor designated for residential use will also be considered residential property.

Regarding overseas property purchases, these properties are not included in the property count for ABSD purposes.

What Is An “Entity” When It Comes to ABSD?

An entity would refer to someone who isn’t an individual, and is defined by the following criteria:

  1. An unincorporated association

  2. A trustee for a collective investment scheme when acting in that capacity

  3. A trustee-manager for a business trust when acting in that capacity

  4. The partners of the partnership whether or not any of them is an individual, where the property conveyed, transferred, or assigned is to be held as partnership property

If a property is purchased by buyers of different profiles, then the ABSD will be calculated based on the buyer profile with the highest ABSD rate. Additionally, all entities will be subject to the new ABSD rate of 35%.

ABSD Rates: Calculating ABSD in Singapore

As mentioned, the ABSD rates levied will depend on your residency status, and the rate you’ll need to pay is based on your nationality at the time of your property purchase.

The ABSD percentages shown in the tables above will apply to either the property’s purchase price or market value, whichever is higher.

Do note that the rates may change in the future, depending on the state of the property market. Here are the current ABSD rates:

Buyer profile

ABSD payable (on or after 16 December 2021)

Singapore Citizen buying first property

No need to pay ABSD (no change)

Singapore Citizen buying second property

17%

Singapore Citizen buying third and subsequent properties

25%

Singapore Permanent Resident (PR) buying first property

5% (no change)

Singapore Permanent Resident (PR) buying second property

25%

Singapore Permanent Resident (PR) buying third and subsequent properties

30%

Foreigner buying any property

30%

Entities (company or association) buying any property

35% (additional 5% if entity is housing developer; non-remittable)

Trustee buying any residential property

35%

Update: From 9 May 2022, any residential property transferred into a living trust will be subject to a 35% ABSD rate.

How Do You Calculate ABSD in Singapore?

For instance, say if a property is valued at $1 million but the selling price is $1.1 million. Assuming that you’re subjected to an ABSD rate of 17%, the ABSD amount that you’ll need to pay is $1.1 million x 17% = $187,000.

Find out How Much You Need to Pay with an ABSD Calculator

To save yourself from any price shock when buying your property, it would be good to accurately calculate your ABSD amount prior. PropertyGuru has an easy-to-use ABSD stamp duty calculator that gives you a breakdown of how much tax you would need to pay, on top of your actual housing price.

All you would need to do is enter your details to see a breakdown of your estimated stamp duty.

Are There Any ABSD Exemptions?

There are some situations in which you won’t need to pay ABSD, such as:

  • When you’ve already contracted to sell your current residential property before you sign the Option to Purchase for your new one

  • When you’re downgrading from a private property to an HDB resale flat

Although not technically considered an ‘exemption’, some families go for dual-key condo units, which are sold as one property (hence no ABSD levied), but feature two separate homes (a main unit and sub-unit).

Some also consider decoupling, which is when co-owners ‘split up’ and transfer ownership of the shared home to one half of the couple. (More on these ‘strategies’ to avoid ABSD below.)

Also, under the respective Free Trade Agreements (FTAs), Nationals and Permanent Residents of Iceland, Liechtenstein, Norway, Switzerland and the United States of America will be treated the same as Singapore Citizens. In other words, you won’t need to pay ABSD for your first property purchase. Your legal representative can e-Stamp via the e-Stamping portal on IRAS’s website to apply for the remission.

[ArticleCallout]{ “title”: “IRAS e-Stamping 6-Step Guide: How to Pay Stamp Duty Online in Singapore”, “excerpt”: “Read more here.”, “link”: “https://www.propertyguru.com.sg/property-guides/pgf-iras-estamping-stamp-duty-guide-37000”, “image”: “https://img.iproperty.com.my/angel/1110×624-crop/wp-content/uploads/sites/3/2022/06/iras-estamping-guide-singapore.jpg” } [/ArticleCallout]

ABSD Remission for Foreigners Married to Singaporeans

Now, although we’ve indicated earlier that ABSD is always levied on foreigners and Permanent Residents, there’s one instance where these individuals won’t need to pay it.

If you’re a foreigner or Permanent Resident who’s married to a Singaporean, and you don’t own any residential property, you don’t need to pay ABSD.

You can also get an ABSD refund if you’re moving house as a married couple. To qualify for the refund, the property that you paid ABSD for needs to be sold within 6 months of you buying the second. You can view the full terms and conditions on IRAS’s website.

ABSD Remission Under the COVID-19 (Temporary Measures) Act

Married Singaporean couples who plan to jointly buy or have bought a second property can apply to get a one-year ABSD extension to have more time to sell their second property.

Couples must include at least one Singapore Citizen spouse, and the purchased property must be under both the couple’s names only if remission conditions are met.

To qualify for the ABSD extension, the second property will need to be purchased on or before 1 June 2020 and the schedule for the sale of the first property expired on or after 1 Feb 2020.

I’m Buying a Property With Someone Else: How Does ABSD Work?

When you’re buying a property with someone else, different ABSD rates might apply to both of you. If this is the case, then the higher ABSD rate will be used.

An example shown below demonstrates how it works:

Your properties

Your spouse’s properties

Condominium unit (sole owner)

Condominium unit (sole owner)

Terrace house

Let’s say you and your spouse are Singaporean. Since your spouse has two properties, after a joint purchase there will be a total of three properties. The ABSD rate applied will be 25%. On the other hand, you only own one property, but after a joint purchase, you have two properties. So your ABSD rate will be 17%. If you are confused, read more here.

The ABSD payable will then be based on your spouse’s profile, which is 25%.

How to Pay ABSD in Singapore

You can make payment for your ABSD online through the e-Stamping Portal using NETS, a cheque, or a cashier’s order.

Alternatively, you can also make payment at IRAS Surf Centre e-Terminals, or SingPost Service Bureaus (located in Chinatown, Novena, Raffles Place, and Shenton Way). These stamp duties need to be paid in full, and you won’t be able to pay them via instalments.

You can make use of your CPF to pay ABSD. Once you’ve paid these duties, you can get a reimbursement from your CPF account.

Note that ABSD needs to be paid within 14 days of the sale and purchase agreement being signed. If your sale and purchase agreement was signed overseas, the deadline is 30 days after the agreement was received in Singapore.

Are There Any Penalties for Late ABSD Payment?

Delay in payment for…

Penalty for late ABSD payment

Up to 3 months

$10 or an amount equal to the ABSD payment, whichever is higher

Exceeding 3 months

$25 or an amount equal to four times the ABSD payable, whichever is higher

If ABSD is not paid by the deadline, you will get a Demand Note reminding you to make payment. This letter will also inform you of the penalty that you’ve incurred for missing the deadline.

IRAS may appoint your bank, employer, tenant, or lawyer to pay the outstanding stamp duty on your behalf. In serious cases, legal action may be taken to recover the outstanding amount.

Read more about what happens when you miss your stamp duty deadlines on IRAS’ website.

Conclusion: Should You Try to Avoid ABSD?

In July 2020, however, the Monetary Authority of Singapore (MAS) released an official statement saying that there will be no easing of current property curbs as the property market has remained stable in spite of COVID-19. Currently, property transaction volumes and prices are at a high for all property types. Moreover, in December 2021, Singapore unveiled a package of measures to calm the housing market, including higher stamp taxes and tighter lending limitations.

And with the new property cooling measures, we have no doubt that the raised ABSD rates will be a hotly debated topic among property buyers and investors. Not many are fans of the measure, and unsurprisingly so: it is, after all, an extra tax meant to discourage buyers by increasing the cost of property in Singapore and foreigners and entities for speculating.

This is why many property buyers look for exemptions and ‘loopholes’ to avoid paying the extra tax. These could very well work, but in some cases, it may be easier and cheaper to simply pay the ABSD.

[ArticleCallout]{ “title”: “ABSD Singapore: 7 Ways to Avoid It (and Why You Should Always Think Twice Before Doing It)”, “excerpt”: “Read more here.”, “link”: “https://www.propertyguru.com.sg/property-guides/pgf-how-to-avoid-absd-49744”, “image”: “https://img.iproperty.com.my/angel/1110×624-crop/wp-content/uploads/sites/3/2022/09/ABSD-Singapore.jpg” } [/ArticleCallout]

In conclusion, yes, ABSD is an extra cost, and it’s not going anywhere anytime soon. If you’re looking for ways to avoid ABSD (legally!), make sure you do your calculations and consider your alternative ‘strategies’ carefully so you don’t end up paying more than you have to.

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