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

The April 2023 property cooling measures saw ABSD rates adjusted again. Most notably, the ABSD rate for foreigners buying any property in Singapore doubled from 30% to 60%. This marks the third round of property cooling measures since December 2021.

For those who want to invest in property, this ABSD rate revision is ‘bad news’. They now have to pay a higher tax to own multiple residential properties in Singapore. For some, purchasing an overseas property could be an alternative to expanding their real estate portfolio without having to incur ABSD.

Whether you’re a local investor or a foreigner looking to purchase property in Singapore, here’s all you need to know about ABSD in Singapore.

• Watch our video on ABSD

• What is Additional Buyer’s Stamp Duty?

• What are the current ABSD rates in Singapore?

• Why was ABSD introduced?

• Definition of ‘Residential Property’ for ABSD

• Definition of ‘Entity’ for ABSD

• ABSD exemptions

• ABSD remission for foreigners married to Singaporeans

• How to pay ABSD

• Penalties for late ABSD payment

• Should you try to avoid paying ABSD?

Watch Our Video on Additional Buyer’s Stamp Duty

Are you an investor looking to park your wealth in Singapore property? Check out our upcoming Property TourTalks 2023, a series of bus tours tailored for Singapore property seekers with different needs.

We recommend the Wealth Building tour for investors like yourself who want to navigate investment following the latest ABSD hikes, how to choose the ‘best’ property for you, and other home financing FAQs. More about Property TourTalks at the bottom of this article.

What Is Additional Buyer’s Stamp Duty?

ABSD in Singapore is a tax that’s levied on top of BSD. It’s computed based on the valuation or the selling price of the property, whichever is higher.

What Are the Current Additional Buyer’s Stamp Duty Rates in Singapore?

The April 2023 property cooling measures saw hikes in the ABSD amounts payable. The ABSD percentages shown in the tables above will apply to the property’s purchase price or market value, whichever is higher.

How Is ABSD Calculated?

For instance, say a property is valued at $1 million but the selling price is $1.1 million. Assuming that you’re a Singapore Citizen, and you’re buying your second property, you are subjected to an ABSD rate of 20%. So, the ABSD amount that you’ll need to pay is $1.1 million x 20% = $220,000.

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.

I’m Buying a Property With Someone Else: How Does Additional Buyer’s Stamp Duty Work?

When you’re buying a property with someone else/with different profiles, 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:

Let’s say you and your spouse are Singaporean. You have no property while your spouse currently owns two properties. You are both intending to purchase a terrace house together.

With the co-purchase of this new terrace house unit, your spouse will own a total of three properties. The ABSD rate applied for them will be 30%. On the other hand, you will only own one property after the joint purchase. Even though this is your first property, the ABSD payable is based on your spouse’s profile. So, there will be an ABSD rate of 30% will apply. If you are confused, read more here.

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

Why Was Additional Buyer’s Stamp Duty Introduced?

• 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 for second and subsequent purchases, for foreigners and entities

• April 2023: ABSD rates were increased again for second and subsequent purchases, foreigners, entities, and trustees. ABSD rates remained unchanged for housing developers

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 to promote a sustainable housing market.

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.

On 16 December 2021, another round of cooling measures was announced. Among them, ABSD rates increased. The latest round of property cooling measures took effect on 27 April 2023, with ABSD rates being adjusted upwards again.

The three rounds of property cooling measures announced since December 2021 reaffirm the Singapore government’s commitment towards prioritising housing for owner-occupation. Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group, notes that first-time Singaporean buyers remain unaffected and PRs buying their first property did not see an adjustment to the existing 5% ABSD tax.

“Foreign investors are most affected by the April 2023 property cooling measures and will be deterred from buying property as they are the worst hit. The previous December 2021 ABSD adjustment of 30% was already considered to be high for foreign investors, and the latest hike will probably push these buyers to recalibrate their positions.

That said, most foreign buyers purchase property in Singapore for wealth preservation with a longer investment horizon in mind. Buyers with deep pockets may still enter the market, but they will put downward pressure on asking prices.”

In light of these changes, he also postulates that smaller units and the CCR market could see slower sales and conversions. But after an initial kneejerk reaction, little impact is likely to be observed on home purchases in the range of $1.8 million to $4 million in the RCR and OCR. This is due to the still-robust demand from HDB upgraders as well as households being in a stronger position than before (in terms of cash liquidity) due to intergenerational wealth transfers.

Definition of ‘Residential Property’ for Additional Buyer’s Stamp Duty

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.

Definition of ‘Entity’ for Additional Buyer’s Stamp Duty

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

Are There Any Additional Buyer’s Stamp Duty 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 (OTP) for your new one

• When you’re downgrading from 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. But while decoupling is not illegal, doing so for tax evasion is. Recently, IRAS has announced it will conduct regular audits to prevent the occurrence of “contrived or artificial” arrangements and will reward whistle-blowers who call out private property buyers who exploit the “99-to-1” scheme to evade ABSD tax with up to $100,000.

Additionally, 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 SCs. 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 remission.

Additional Buyer’s Stamp Duty 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 six months of you buying the second. You can view the full terms and conditions on IRAS’s website.

How to Pay Additional Buyer’s Stamp Duty 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 Additional Buyer’s Stamp Duty Payment?

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.

Should You Try to Avoid Additional Buyer’s Stamp Duty?

Most Singaporeans tend to view owning property as a good investment move. Seen either as a way to earn passive income through collecting rent or as a way to park wealth in a ‘safe haven’, owning multiple properties is a goal many have to financially secure themselves. This attitude towards owning multiple properties comes as no surprise, considering how property prices have remained resilient over the years.

Currently, property prices are at a high for all property types. With the latest round of April 2023 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 most cases, it may be easier and cheaper to simply pay the ABSD. Not to mention, while you may find legal ways to ‘avoid’ paying ABSD by exploiting ‘loopholes’, tax evasion is still illegal.

Property TourTalks: Investors, Build Wealth This September 2023!

Want to invest in your second property and need advice on how to pick and finance it? Come onboard the upcoming Property TourTalks Wealth Building Tour, happening on the 16, 23, and 24 September 2023. Our property experts will show you some investment properties around Singapore you can consider. Our PropertyGuru Finance Mortgage Experts will also be available to address all your property financing concerns.

Best of all, these tours are completely free, and attendees stand a chance to win exciting gifts and prizes.

We look forward to seeing you!

For more property news, content and resources, check out PropertyGuru’s guides section.

Looking for a new home? Head to PropertyGuru to browse the top properties for sale in Singapore.

Need help financing your latest property purchase? Let the mortgage experts at PropertyGuru Finance help you find the best deals.