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 will be subject to an ABSD of 35%.

To keep you in the know, this guide will cover what is ABSD, the ABSD rates, ABSD remission and more.

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

ABSD 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.

How Do You Calculate ABSD?

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 12% ABSD, the ABSD amount that you’ll need to pay is $1.1 million x 12% = $132,000.

Who Needs to Pay ABSD?

ABSD applies 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 will be levied on all purchases. The first purchase will be 5% while the second purchase will be 25%, and third and subsequent purchases will be 30%.

  • Foreigners: 30% ABSD 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 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 “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.

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

Property speculation dropped after the 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 dip from 90% to 85% and the Total Debt Servicing Ratio (TDSR) threshold tightening, dropping from 60% to 55%, ABSD rates were adjusted.

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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.

When it comes to overseas property purchases, these properties are not included in the property count for ABSD purposes.

A small model of a bungalow atop a calculator
The ABSD rate can be up to 25% for Singaporean citizens

ABSD Rates: How Much Is ABSD in Singapore? (Updated on 16 December 2021)

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

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.

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%.

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.

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 so that they 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 names of the couple 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 2 properties, after a joint purchase there will be a total of 3 properties. The ABSD rate applied will be 25%. On the other hand, you only own 1 property, but after a joint purchase, you have 2 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

You can make payment for your ABSD online through the e-Stamping Portal using NETS, cheque, or a cashier’s order. Read our guide on how to use the IRAS e-Stamping Portal.

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 (as mentioned above) to avoid paying the extra tax. The most popular ways to legally work around the ABSD are to…

  • Decouple, and purchase it as your ‘first’ property again

  • Buy a dual-key condo

These could very well work, but in some cases, it may be easier and cheaper to simply pay the ABSD. Here are some examples:

For instance, decoupling property may actually be more expensive than paying ABSD. This is especially if the co-owner you’re thinking of transferring the shared property to already owns another residential property. Decoupling would incur not just the legal and conveyancing fees, but a Buyer’s Stamp Duty (BSD) AND an Additional Buyer’s Stamp Duty (ABSD) on the home to be transferred. For a $1 million property, these expenses can easily go up to $200,000 or more. If the second property you’re trying to buy is cheaper, the 17% ABSD on that may very well cost less.

Many buyers consider dual-key condos as well. This is a good option if you wanted to get a second property to rent out. With dual-key condos, you can live in the main unit, and lease out the (separate, but adjacent) sub-unit. You won’t have to wait until MOP either, because you’re technically not renting out the entire apartment.

Of the two, dual-key condos seem like the best way to avoid ABSD. However, you should note that dual-key condos are usually priced at a premium (higher than regular condos of the same size) and you must be willing to live next to your tenant.

In conclusion, yes, ABSD is an extra cost, and no, it’s not going anywhere anytime soon. If you’re looking for ways to avoid ABSD, 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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