ABSD - How Much Stamp Duties Should We Pay?
Additional Buyer’s Stamp Duty (ABSD) is an additional tax imposed on buyers, on top of the existing Buyer Stamp Duty. Depending on their profile, the ABSD rate is computed on the purchase price or the market value of the property, whichever is the higher amount. If you are unfamiliar with the computation of ABSD, we have compiled 6 different scenarios of how ABSD is computed depending on the situation for your reference.
1. One Property, Multiple Profiles
ABSD rates is easily determined, when a property is purchased by just one buyer. However, when a property is jointly bought, what will be the rate applied?
The rule of thumb is to charge the highest ABSD rate, depending on the profiles of the buyers. For example, if a Singapore Citizen (SC) and a Singapore Permanent Resident (SPR) co-buy their first property, ABSD rate follows that of the SPR at 5%.
However, there are certain exemptions to the payment of the ABSD rate. For example, a married couple may not be required to pay ABSD for their matrimonial home, if they have met the remission conditions. Read on below (point 6) to find out more about the ABSD remission for married couples.
It is also worth noting that if a property is purchased to be held in trust, the ABSD rate chargeable is dependent on the profile of the beneficiary.
2. One Transaction, Multiple Properties
As the name of this scenario suggest, it is possible to purchase multiple properties in a single transaction. However, do note that each property listed will be counted as a separate property.
Hence, the buyer in this case has the choice to specify which property he wants to regard as the first property. The ABSD of this property will be computed based on the rate of the first property bought, while the remaining properties will be calculated based on rates of subsequent properties.
For example, if you are a SC who have purchased two residential properties in one transaction, and choose property A as your first property. The ABSD rate chargeable will not be applicable on your first residential property, but the rate of 12% is chargeable on your second property.
3. Full Count for Partial Ownership and Joint Partnership
As long as a buyer owns any interest in a property, the property will as such be included in the count of properties owned by them. For example, if a SC jointly owns a property with their spouse and also owns a 20% share in another property with their sibling, the number of properties owned by the SC is counted as two properties and should they wish to purchase another property, this property will be counted as their third property and they will thus be charged an ABSD rate of 15%.
4. Mixed-Use Properties
For mixed use properties, only the residential component is subjected to ABSD. For example, in residential-commercial hybrid like a shophouse, ABSD is calculated based on the purchase price or market value of the residential unit (whichever is higher).
5. Foreigners Under the FTA
With effect from 6 July 2018, ABSD rate for foreigners stands at 20%. However, not all foreigners are subjected to the abovementioned rate; certain foreigners under the Free Trade Agreement (FTA) are accorded the ABSD rates of a SC. Such foreigners include nationals and permanent residents of Norway, Iceland, Liechtenstein, Switzerland, and Nationals of the United States of America.
6. Second Purchase by Married Couples
For married couples, where one of the spouse is a SC or from one of the countries under the FTA, ABSD remission is possible on the second purchase of the house if they have met the remission conditions set by IRAS. These conditions are to be met:
- The married couple did not own interest in more than one residential property at the date of purchase of the second residential property
- ABSD has been paid for the second residential property.
- The first property (co-owned or owned separately) is sold within 6 months from the date of purchase of the second property (if it is a completed property) or the issue date of the TOP/CSC (whichever is earlier) of the second property (if it is an uncompleted property.)
- The married couple remains married and there is no change of ownership in the second residential property at the time of sale of the first residential property.
- The married couple has not purchased or acquired a third or subsequent property from the date of purchase of second property to the date of sale of the first property.
- The application for ABSD refund is made within 6 months after the date of sale of the first residential property.
In essence, if one of the spouse owns more than one property at the time of purchase of the second property or if neither spouse has own any property, remission of ABSD will not be possible. Properties owned is defined as those owned wholly, partially or jointly with others.
Application for Remission
You may apply for ABSD remission by submitting your application via the e-Stamping Portal on IRAS website. If you require any advice on how to manage your ABSD on your next property purchase, please feel free to contact any of our real estate consultants for a non-obligatory discussion.