In Singapore’s dynamic real estate landscape, the introduction of increased Additional Buyer’s Stamp Duty (ABSD) rates has immensely reshaped the calculus or property investment and ownership. Long gone are the day 1990’s when Singapore’s property investors navigated the market with ease, leveraging renal income from one property to finance the acquisition of the next.
The ABSD, a hefty tax imposed on the purchase of second and subsequent properties is proving to be a formidable barrier, challenging even the most astute investors to rethink their strategies. Whether you want to expand your portfolio or stepping into the realm of property ownership for the very first time, here is how to avoid ABSD without strain.
Upgrade to an Executive Condominium (EC)
If you want to upgrade your home but have no plans to own two properties simultaneously, you need to make do with the ABSD upfront. That’s stressful! But you can seek ABSD remission if you sell your previous flat within six months of acquiring the new home.
What this simply means is that you must still come up with the hefty 20% tax in cash or from your CPF account. But there’s a positive aspect to this. Actually, this particular rule only pertains to private condos. You don’t have to pay ABSD upfront when buying a new EC.
National or Permanent Resident Under the Free Trade Agreements (FTAs)
Depending on your nationality, you might be exempt from or eligible for remission of ABSD under FTAs. Nationals or Premanent Residents of countries such as Iceland, Lichenstein, Norway, Switzerland, and The United States of America enjoy the same ABSD rates as Singaporeans when buying residential properties in Singapore.
The privilege emanates from the ‘national treatment’ obligation outlined in the Singapore-European Free Trade Association (ESFTA) agreement. National and Permanent Residents of these countries are eligible for ABSD remission under the respective FTAs.It is worth mentioning that the remission can be facilitated by their conveyancing lawyer through the e-stamping portal on the IRAS website.
Remember, decoupling itself is not illegal, but using it to avoid paying ABSD tax is. To understand this, you need to understand the between tax avoidance and tax evasion. Tax avoidance entails using legitimate methods and strategies to reduce tax liability. Ensure you research more on How to avoid ABSD in Singapore to avoid leaving any stones unturned.
