ABSD Implications: Transferring Residential Property to a Living Trust

New Additional Buyer’s Stamp Duty Rules for Living Trusts

When residential property is transferred into a living trust^[1], Additional Buyer’s Stamp Duty — ABSD (Trust) — is payable. It was introduced on 9 May 2022 (then 35%) and has since been raised to 65%, effective 27 April 2023. The rates shown in this article are the current rates.

1. Currently, when a residential property is transferred into a living trust, Buyer’s Stamp Duty (BSD) is payable. ABSD may also be payable, depending on the profile of the beneficial owner(s) of the residential property transferred into the trust.

2. If a residential property is transferred into a living trust without an identifiable beneficial owner, ABSD was previously not applicable.

3. Following a periodic policy review, the government introduced ABSD (Trust) to address and close this gap (35% when introduced; currently 65%). Under this measure, ABSD is payable on residential property transferred into a living trust even if there is no identifiable beneficial owner. The ABSD is intended to promote a stable and sustainable residential property market, and as such, it should apply to transfers of residential properties into all living trusts, regardless of whether there are identifiable beneficial owners of the residential property transferred into such trusts.

4. ABSD (Trust) is to be paid upfront at the time of transfer. As a concession, a trustee may apply to the Inland Revenue Authority of Singapore (IRAS) for a refund of the ABSD (Trust), provided that the following conditions are met:

a) All beneficial owners of the residential property are identifiable individuals;

b) Beneficial ownership of the residential property has vested in all of these beneficial owners at the time of the property transfer into the trust; and

c) The beneficial ownership cannot be changed, revoked, or be subject to any subsequent conditions under the terms of the trust.

The refund amount will be based on the difference between the ABSD (Trust) rate of 65% and the ABSD rate corresponding to the profile of the beneficial owner with the highest applicable ABSD rate. The application for the refund must be made to IRAS within six months after the instrument is executed.

^[1]A living trust is one that is created by a person (the settlor) during his or her lifetime.

A summary of the current ABSD rates by buyer profile is in Table 1:

¹Whether owned wholly, partially, or jointly with others.

²As an entity, a housing developer will also be subject to the ABSD rate for entities. Housing developers may apply for remission of this ABSD, subject to conditions.

³A housing developer refers to an entity in the business of housing development (i.e., construction and sale of housing units) with respect to the subject property acquired. This includes a trustee for a housing developer, who will continue to be subject to the 40% ABSD rate (i.e., 5% non-remissible; plus 35% remissible upfront, subject to conditions).

⁴This 5% ABSD for housing developers is in addition to the ABSD for all entities. This 5% will not be remitted and is payable upfront upon the purchase of residential property.

⁵ABSD (Trust) is payable by a trustee of any trust when acting in that capacity, but excludes the following: (a) a trustee for a collective investment scheme when acting in that capacity; (b) a trustee-manager for a business trust when acting in that capacity; and (c) a trustee for a housing developer when acting in that capacity. (a), (b) and (c) are already subject to ABSD (Entity) and ABSD for Housing Developers respectively, when they acquire residential property.

Frequently Asked Questions

1. What is an identifiable individual beneficial owner?

An identifiable beneficial owner of a trust residential property refers to an individual who:

a. is identified in the trust deed or document as a beneficiary of the residential property; and

b. has beneficial ownership of the residential property, which is not revocable, variable, or subject to any subsequent condition under the terms of the trust.

2. Will ABSD (Trust) be imposed retrospectively on all Singapore residential properties held on trust before the effective date of ABSD (Trust)?

No. ABSD (Trust) will only apply to any transfer or settlement of residential property into a trust (whether existing or new) that is executed on or after 9 May 2022.

If there is more than one instrument for the transfer or settlement of residential property into a trust, ABSD (Trust) is payable based on the execution date of the first instrument (e.g., if the instrument is executed in Singapore, ABSD (Trust) is payable within 14 days after the date of execution of the first instrument). The first instrument can be an acceptance of an Option to Purchase (OTP), a Sale & Purchase Agreement (S&P), a declaration of trust, or a settlement agreement, as applicable.

3. I exercised an Option to Purchase (OTP) on 15 June 2024 to purchase a residential property on trust for my wife (a Singapore Citizen), who currently owns another residential property. I also executed a trust declaration stating that I hold the property on trust for my wife, who is the sole beneficial owner of the trust asset. Am I eligible for remission of ABSD (Trust) if the beneficial ownership has vested in my wife and there are no other provisions in the trust that can revoke, vary, or subject my wife’s beneficial ownership of the trust property to any conditions?

As the property is purchased on trust for your wife, ABSD (Trust) of 65% is payable. You will need to pay the ABSD (Trust) upfront before an application for remission can be made, and IRAS will assess if the conditions for the refund are met.

For this scenario, if you apply within the deadline and provide the necessary supporting documents, you will be eligible for a remission of the difference between the ABSD (Trust) amount paid and the ABSD that would have been payable by your wife had she acquired the property directly in her name. As this is the second residential property owned by your wife, the total ABSD amount to be refunded will be 45% (i.e., 65% – 20%).

4. I exercised an Option to Purchase (OTP) on 20 June 2024 to purchase a condominium unit on trust for my minor child (a Singapore Citizen). This is my child’s first property. I also executed a trust declaration stating that I hold the condominium unit on trust for my child, who is the sole beneficial owner of the trust asset. Am I eligible for remission of ABSD (Trust) if the beneficial ownership is vested in my child and there are no other provisions in the trust that can revoke, vary, or subject my child’s beneficial ownership in the trust property to any conditions?

As the property is purchased on trust for your child, ABSD (Trust) of 65% is payable. You will need to pay the ABSD (Trust) upfront before an application for remission can be made, and IRAS will assess if the conditions for the refund are met.

For this scenario, if you apply within the remission period and provide the necessary supporting documents, you will be eligible for a remission of the difference between the ABSD (Trust) amount paid and the ABSD that would have been payable by your child had he/she acquired the property directly in his/her name. As this is the first residential property owned by your minor child, the total ABSD amount to be refunded will be the full 65% ABSD previously paid.

5. I executed a trust declaration on 9 May 2024 to declare that I hold a condominium unit on trust for my children, Yiyi and Haohao. The trust states that Yiyi beneficially owns 50% of the condo unit, while Haohao is entitled to the other 50% only upon his graduation from university. I paid 65% ABSD (Trust) when I executed the trust declaration. Am I eligible for remission of ABSD (Trust)?

No, you will not be eligible for remission of ABSD (Trust). One of the conditions for remission is that the beneficial owners of the trust asset consist solely of identifiable individual beneficiaries. As Haohao’s interest in the property is contingent on him graduating from university, he is not an identifiable individual beneficiary, and thus this condition is not met, and no refund will be given.

6. I executed a trust declaration on 9 May 2024 to declare that I hold a condominium unit on trust for my minor child, where my child’s beneficial interest in the property will only vest at the age of 21. Am I eligible for remission of ABSD (Trust)?

No. The remission condition is based on vested beneficial ownership at the time the property is transferred into the trust. Deferred beneficial ownership that will only vest in the future will not qualify for the refund of ABSD (Trust).

7. I have submitted an application for remission of ABSD (Trust). What is the processing time and when can I receive the refund if my application is approved?

Most applications will be processed within 2 months of the submission of complete information. If the application has been approved, the refund will be made within 1 month of approval.

8. I exercised an Option to Purchase (OTP) to purchase a condominium unit on 1 July 2024 and executed a declaration of trust to declare that I hold the property on trust for my child. Can I submit an application for upfront remission instead of paying the 65% ABSD first and getting a refund later?

No, under the Stamp Duties (Trusts for Identifiable Individual Beneficiary) (Remission of ABSD) Rules 2022, the ABSD chargeable on the instrument must be paid before any remission can be granted.

Therefore, we are unable to grant any remission of ABSD before the ABSD (Trust) is paid.

If the document is signed in Singapore, please stamp and pay within 14 days after the document is signed. If it is first signed outside Singapore, please stamp and pay within 30 days after the document is first received in Singapore, and make payment by the due date to avoid penalties for late stamping.

9. If I intend to execute a will stating that my residential property will be held on trust for my children upon my death, will the trust be subject to the 65% ABSD (Trust)?

ABSD (Trust) applies to any transfer of residential property into a living trust on or after 9 May 2022. A living trust is defined as a trust created by a person (the settlor) during his or her lifetime and does not include a testamentary trust (e.g., a trust established by a will that becomes effective upon the death of the settlor).

As the trust in this scenario is a testamentary trust, ABSD (Trust) will not apply.

Official Sources & References

• IRAS — Additional Buyer’s Stamp Duty (ABSD) rates: ABSD official page
• IRAS — Buyer’s Stamp Duty (BSD): BSD official page
• IRAS — Remission of ABSD (Trust): ABSD (Trust) remission
• IRAS — Late Payment or Non-Payment of Stamp Duty: Late-payment penalties

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