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3 Legal Ways To Avoid ABSD As A Property Investor

Updated: Oct 22, 2021

ABSD Property

Are you shopping around for attractive properties to invest in during this COVID-19 period? Before you bag that property you have been eyeing, have you thought about how the Additional Buyers Stamp Duty (ABSD) may eat into your potential returns? Do you know that there are actually ways to manage ABSD as property investors legally?

Wait, what exactly is ABSD?

Additional Buyers Stamp Duty (ABSD) is tax imposed on residential property purchases when the property owner is either a Permanent Resident (PR) or a foreigner or a Singaporean purchasing more than 1 property. This is on top of the Buyer’s stamp Duty (BSD) that applies to any purchase of residential properties in Singapore. And yes, your HDB flat is also taken into consideration as the 1st property for the computation of ABSD.

Singapore citizens pay ABSD of 12% on the 2nd property and 15 % on the subsequent purchase. On the other hand, PRs pay ABSD of 5 % on the 1st property and 15 % for all subsequent buys. Foreigners pay ABSD of 20% while entities pay 26% for ABSD for all property purchases in Singapore.

I know what ABSD stands for now, so how do I avoid paying it for the properties I am investing in?

Here are a few methods you can consider to limit or circumvent the ABSD altogether:

1. Decouple one of the owners from your current residential property

Decoupling refers to the transfer of one party’s ownership share of the property to the other co-owner. In other words, the decoupled co-owner can be considered as a first-time property buyer and is not liable to pay ABSD on the new property.

For instance, your partner and you buy a property as tenants-in-common to divide the ownership into 99:1 where one party owns 99% and the other person owns 1%. In this way, both co-owners can apply for a home loan together and utilise both of your CPF Ordinary Accounts (OA) for mortgage financing and downpayment.

When the co-owner who owns 1% saves up enough for a second property, the 1% can then be sold to the spouse (who pays BSD on the 1% transferred in cash). If the second property is purchased within the span of 3 years, the co-owner who sells the 1% would have to fork out a Seller Stamp Duty (SSD) of 4 to 12 percent in cash as well.

There are of course a few points to note regarding the above method though–

  1. You or your co-owner must be comfortable with splitting the ownership of the first property into 99: 1 as this may be a point of contention in cases such as divorce.

  2. The co-owner with 99 percent should have enough cash or CPF funds to reimburse the selling owner’s CPF used funds with accrued interest.

  3. There should be enough income to undertake the full loan of the property as a sole-owner.

2. You and your spouse can own 2 properties separately

If you wish to stay in one property and use the other property to collect rental income, consider not listing your spouse as a co-owner of your first property. In this way, your spouse can buy a private property as a first-time home buyer and not incur any ABSD on the residential property purchase if he/she is a Singapore citizen.

However, there are a few caveats for this method–

  1. Only the CPF Ordinary account (OA) of the legal owner of the house can be used for loan application

  2. The legal owner has to fulfill the income requirements in order to qualify for loans

  3. Since only one of you is listed as the property owner, there is a need to work out how to finance the monthly mortgage together to avoid disputes

Note that mortgage repayments cannot exceed 30% of the sole owner’s total monthly income for new executive condominiums (EC) and HDB apartments (Mortgage Servicing Ratio). As for resale ECs and other private residential properties, the loan cannot exceed 60% of the legal owner’s total monthly income, taking into account all current debt obligations (Total Debt Servicing Ratio).

Hence, the spouse drawing a higher salary should ideally own the property with the higher value in order to qualify for home loans.

3. Buying a property under your child’s name

If your child is under 21 years old and you have a lot of liquidity on hand, you may wish to set up a property trust for your child and purchase a property as the trustee. As you are not considered the legal owner, the property purchase would not be yours and you would not incur ABSD for your future home purchases. Debtors would also not be able to take the property from you in the event of bankruptcy as well.

Of course, you are expected to pay for BSD, full costs and taxes on the property with 100 percent cash as banks do not approve loans for properties bought under trusts. This legal owner of this property is also your child, so all proceeds from rental income or subsequent selling of the property would also belong to your child as well. Your child would also not be able to own another HDB flat at the same time and would be liable to pay ABSD for other properties they wish to purchase. It is best to consult experienced conveyancing lawyers about this as the authorities may nonetheless impose ABSD if they decide that the sole purpose of the trust is to avoid ABSD.

On the other hand, if your child is above 21 years old and a first time buyer, he/she can buy a private property with his/her name but you provide the funds. In this way, there is also no need to pay ABSD.

There are 3 questions you should ask yourself first before buying a property under your adult child’s name:

● What happens when there is a family conflict? Since your child is the legal owner of the private property, he/she is able to sell it or mortgage it to the bank to borrow money. Are you able to stomach the potential fallout in the future if disagreements arise pertaining to the property ownership just to save on ABSD? ● What if your child wishes to purchase his/her first matrimonial home with the spouse? They would be regarded as private property owners already and the current property would have to be sold to you with ABSD. For the bidding of a HDB BTO unit or an EC, your child would have to sell off the private home 30 months prior to the application as well. ● What if your child is unable to qualify for the loan? Your child would need to furnish income records to prove that he/she is able to repay the monthly mortgage and your income would not be included as part of the loan application.


There are plenty of opportunities to pick up ways to maximise the returns on investment for your properties and cut down on ABSD. Other than the above three legal ways to do so, you have to do due diligence by reading up on latest property updates and speak with real estate experts on the right way to handle it. If you would like to find out which method works best for your current situation, do feel free to speak with any of our consultants here.

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