Purchasing a second property in Singapore comes with its own set of financial considerations, including the Additional Buyer’s Stamp Duty (ABSD). This article explores key strategies on how to avoid ABSD and provides valuable insights into buying a second property in Singapore without ABSD.
Understanding ABSD in Singapore
ABSD, introduced by the Singapore government, is a tax aimed at cooling the property market. The rate varies depending on the buyer’s profile, including nationality and residency status. Here are the current rates:
- Singapore Citizens: 12% on second property, 15% on third and subsequent properties
- Permanent Residents: 20% on second and subsequent properties
- Foreigners: 30% on any property
Read more about Avoiding ABSD Singapore here.
Strategies to Avoid ABSD
Decoupling Ownership
This involves transferring the share of the first property to one spouse, allowing the other to purchase a second property under their name without incurring ABSD. Here’s a simple breakdown:
- Transfer existing property to one spouse
- Other spouse is eligible to buy a second property as their “first”
Investing in Commercial Properties
ABSD is only applicable to residential properties. Consider investing in commercial properties such as offices, shops, or warehouses, which do not attract ABSD.
Buying Under a Trust
Another way to buy a second property in Singapore without ABSD is to purchase it under a trust for a child or family member. This can be an efficient strategy, especially for those with longer-term estate planning goals.
Frequently Asked Questions (FAQs)
What is ABSD and why is it imposed?
ABSD stands for Additional Buyer’s Stamp Duty, a tax imposed by the Singapore government to cool the property market and control property speculation.
Can foreigners avoid ABSD altogether?
Foreigners cannot completely avoid ABSD when buying residential properties in Singapore. However, they can consider investing in commercial properties, which are not subject to ABSD.
Is it legal to decouple property to avoid ABSD?
Yes, decoupling is a legal method in Singapore. However, it is advisable to engage legal and financial advisors to ensure compliance with all relevant laws.
By implementing these strategies, you can make informed decisions on avoiding ABSD in Singapore and maximizing your property investment opportunities.