Additional Buyer’s Stamp Duty (ABSD) is one of the most talked-about issues when it comes to diversifying real estate investments. Ranging from 5% to 60% for individual buyers (and 65% for entities), paying ABSD can be a hefty expense. Therefore, it’s no surprise that most people want to know how to avoid it at all costs.
After the ABSD was revised on July 5, 2018, a married couple and two property agents even backdated the Option to Purchase (OTP) to avoid paying the higher ABSD. The result? The buyers were sentenced to six weeks in jail and a fine of S$276,000, four times the amount of ABSD evaded. Their agent and the seller’s agent each received an eight-week jail sentence.
Additionally, since May 9, 2022, any transfer of residential property into a living trust is subject to ABSD (Trust); this was initially 35% and was raised to 65% (the current rate) with effect from 27 April 2023, closing more “legal loopholes.” So now, parents wishing to purchase a property for their children must think twice before making such a decision.
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However, ABSD can be legally avoided. If you’re interested in learning how to avoid this tax, please read on.
Table of Contents
But First, What is Additional Buyer’s Stamp Duty?
Additional Buyer’s Stamp Duty (ABSD) is a tax levied on all residential property purchases, in addition to the Buyer’s Stamp Duty (BSD).
It was introduced in December 2011 as a “cooling measure” to discourage Singaporeans, foreigners, and entities from buying multiple properties and flipping them for a profit, while also helping to keep property prices at an acceptable level. Since then, the rates have been adjusted several times based on market conditions — including in 2013, 2018, December 2021, May 2022 (for trusts), and most recently on 27 April 2023 (when ABSD for foreigners was doubled from 30% to 60% and the trustee/trust rate was raised to 65%).
ABSD is taxed based on the property’s valuation or selling price, whichever is higher. It also depends on whether the buyer is a Singaporean, a Singapore Permanent Resident (PR), or a foreigner.
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Who Needs to Pay ABSD, and How Much?
ABSD applies to the following groups of buyers:
| Buyer Profile | ABSD Payable (On or after 27 Apr 2023) |
| Singapore Citizen buying first property | No ABSD payable |
| Singapore Citizen buying second property | 20% |
| Singapore Citizen buying third and subsequent properties | 30% |
| Singapore Permanent Resident (PR) buying first property | 5% |
| Singapore Permanent Resident (PR) buying second property | 30% |
| Singapore Permanent Resident (PR) buying third and subsequent properties | 35% |
| Foreigner buying any residential property | 60% |
| Entity (company or association) buying any property | 65% (with an additional 5% non-remittable if the entity is a property developer) |
| Trustee buying any residential property | 65% |
As you can see, the ABSD is a substantial amount. For example, a Singaporean buying a second property for S$1 million would have to pay S$200,000 in ABSD, and remember this does not include other costs like agent fees, Buyer’s Stamp Duty, etc.
Singapore PRs are required to pay ABSD when buying a property on their own. However, if you are purchasing as a Citizen-PR couple and neither of you owns any property, you can apply for ABSD remission. You can also get ABSD remission for a second property if you purchase jointly as a Citizen-PR couple, but you must sell your first property within six months of purchasing the second one.
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How Can You “Avoid” ABSD?
So, due to the high ABSD rates, it’s understandable that people want to avoid paying for it. How and in what ways can you avoid paying ABSD?
But before we get into that, here are some situations where you are exempt from ABSD:
1. When you upgrade to an Executive Condominium (EC)
When you upgrade from an HDB flat to a private property, or purchase another private residence, you need to pay the ABSD upfront in cash or with CPF (within fourteen days of signing the Sale and Purchase Agreement). You can apply for ABSD remission if you sell your first property within six months.
However, when you buy a new Executive Condominium, you do not need to pay the ABSD upfront. You must dispose of your home within six months of collecting the keys to your EC (or when your EC receives its Temporary Occupation Permit), but at least you don’t have to pay the hefty ABSD upfront (though you may have to pay a resale levy).
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2. When you sell your current property before signing the OTP for a new one
You can sell your own home first before buying a new property. However, this means you will need to rent a place to live or have temporary accommodation.
3. If you are a citizen/permanent resident of these Free Trade Agreement countries
Previously, we mentioned that foreigners are subject to up to 60% ABSD when purchasing property in Singapore. However, under their respective Free Trade Agreements (FTAs), citizens or permanent residents of the following countries enjoy the same ABSD rates as Singaporeans:
- Iceland (citizens, permanent residents)
- Liechtenstein (citizens, permanent residents)
- Norway (citizens, permanent residents)
- Switzerland (citizens, permanent residents)
- United States of America (citizens)
In other words, their first property is exempt from ABSD, but they still have to pay ABSD for their second and subsequent properties.
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4. Decoupling
If you purchased a property as a married couple, you can choose to decouple from your property.
Essentially, when you decouple, you transfer your share of the property ownership to your spouse, leaving you free to purchase a new property without incurring ABSD (as it will be considered your first property).
To do this, both of you need to be either joint tenants or tenants-in-common. This means you can both have different ownership stakes in the property (e.g., 70-30, 60-40) or equal shares. Also, know that transferring your share of ownership is not free, as your spouse needs to buy it from you, which means Buyer’s Stamp Duty will be incurred.
For example, let’s say both of you own a 50% share of a home worth S$1 million. You sell your 50% share to your spouse (S$500,000). As a reminder, here are the Buyer’s Stamp Duty rates for residential properties:
| Purchase Price or Market Value | Buyer’s Stamp Duty (Residential) |
| First $180,000 | 1% |
| Next $180,000 | 2% |
| Next $640,000 | 3% |
| Next $500,000 | 4% |
| Next $1,500,000 | 5% |
| Remaining amount above $3,000,000 | 6% |
So, based on the above, the tax your spouse would need to pay is:
(1% X $180,000 = $1,800) + (2% X $180,000 = $3,600) + (3% X ($500,000 – $180,000 – $180,000)= $4,200) = $9,600
Besides Buyer’s Stamp Duty, if you decouple within three years of purchasing the property, you will also need to pay Seller’s Stamp Duty (SSD), as well as other costs such as legal fees and penalties for applying for a new home loan, which could amount to thousands of dollars. For joint Citizen-PR buyers, the Singapore PR party will also need to pay ABSD (5% for the first property, 30% for the second). For the other Singapore Citizen spouse, he/she will need to pay 20% for the second property and 30% for subsequent properties.
Leo Kwek, a senior real estate agent at AnjiaSG, says, “If the cost of decoupling exceeds the cost of ABSD, then paying the ABSD makes much more sense.”
Finally, when you decouple to buy a new property, you also need to consider whether the sole owner has the income to support the new home loan. If you are using your CPF, you will need to refund your CPF (including accrued interest) back into your CPF account.
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5. Buying in a single name
If you are buying as a couple and you are both first-time property owners, you can purchase in the name of one spouse.
This gives the other spouse the freedom and flexibility to purchase another property in the future without incurring ABSD, once you both have saved enough money.
The consequence of this is that one spouse will have to bear the stress of the mortgage alone and must have sufficient cash and CPF to cover the down payment and home loan.
6. Buying commercial property
Unlike residential properties, you do not need to pay ABSD when purchasing commercial property.
But be aware that commercial properties come with their own risks; for example, they cost more than residential properties. They also require more cash outlay, and the down payment can only be paid in cash. Furthermore, there is a 7% GST charge, which must be paid in cash.
7. Buying a dual-key unit
By purchasing a dual-key unit, you are essentially buying a home with two units side-by-side but paying the price of one. Since it is considered a single property, you can avoid incurring ABSD.
The main unit and the sub-unit share a foyer but have their own living spaces. Depending on how the unit is designed, each unit can have its own living area and shared facilities like a kitchen and bathroom.
Thus, dual-key units are attractive to both homebuyers and investors because you can rent out the sub-unit and still maintain your own privacy.
But given the uniqueness of dual-key units, their price per square foot is often higher, and the extra cost can be up to 25%.
But Does Avoiding ABSD Always Save Money?
Now that you know how to avoid ABSD, should you avoid paying it whenever possible? Are there situations where it is wiser to pay the ABSD?
Leo Kwek, a senior property agent at AnjiaSG, says that sometimes paying the ABSD is more worthwhile than avoiding it, especially if the property has significant appreciation potential.
He says, “It’s all about opportunity. You might miss out on a good deal by waiting for the right moment to save on ABSD. In the long run, saving money doesn’t mean you earn more. Some properties have good appreciation rates and rental yields. In such cases, the ABSD can be considered one of the ‘costs’ of the transaction.”
Some Advice if You Want to Upgrade or Buy a New Property
While buying an investment property can be tempting, remember that purchasing property is a huge financial commitment. Mr. Kwek warns that buyers should thoroughly assess their financial situation before upgrading or buying a new property. He says, “When you have weighed everything fully, it determines how many options you have and what kind of property you can choose.”
Meanwhile, Leo Kwek’s advice is to buy property when you are young, so you are likely to get the longest possible bank loan tenure.
“Remember, price isn’t everything. Cheaper doesn’t mean better. Sometimes, spending more on a property in a good location is better than buying a cheaper one in a less ideal location.”
“When is the best time to plant a tree? 10 years ago. But if you haven’t planted it yet, when is the next best time? Right now. The same goes for property.”
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 — Remission of ABSD for a Married Couple: Married-couple remission
- IRAS — Appealing for Stamp Duty Waiver: Stamp duty waiver / remission
- Ministry of Finance (MOF) — Tax concessions via Free Trade Agreements: FTA concessions
- CPF Board — Which property-related fees can I use my CPF savings for: CPF official page
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