Additional Buyer’s Stamp Duty (ABSD): What You Need To Know

Everyone who buys a property in Singapore is subjected to the Buyer’s Stamp Duty. Depending on several factors, such as your status as a resident and how many properties you already own, you may also be subjected to the Additional Buyer’s Stamp Duty.

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Recently, the Ministry of Finance announced major changes to ABSD Singapore rates, which will impact those looking for properties.

In this article, we’ll take a look at what these changes are, as well as some tips and tricks on how you can avoid it.

• What is Buyer’s Stamp Duty?
• What is ABSD Singapore?
• How to Avoid ABSD Singapore
  • Reimburse it with your CPF OA
  • Sell your first property
  • Apply for remission
  • Try decoupling
  • Foreigners who can apply for ABSD remission
  • Simply invest in other properties
  • Invest in properties outside the country

To understand additional buyer’s stamp duty better, you need to know what buyer’s stamp duty is.

Also called BSD, Buyer’s Stamp Duty is levied on property purchases in Singapore such as residential properties like executive condominiums, HDB units, and industrial and commercial properties.

A property is considered purchased when an individual exercises their OTP, or when the sales and purchase agreement is executed.   

As announced during Budget 2023, BSD rate changes took effect on 15 February this year. The changes only apply to homes with a value in excess of S$1.5 million up to S$3 million, which is a 1% hike from the previous rate. For homes with more than S$3 million value, the tax will be at 6%.

Now that you know what buyer’s stamp duty is, it’s time to understand Additional Buyer’s Stamp Duty or ABSD.

Essentially, ABSD Singapore is an additional tax that you must pay on top of BSD, and it’s computed based on the selling price or valuation of the property, whichever of the two is higher.

Although the recent round of cooling measures done in December 2021 and September 2022 had a moderating effect on the residential market in Singapore, property prices in the first quarter of 2023 still showed acceleration and more demand.

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This paved the way for the increase of ABSD Singapore as a way to alleviate the tight demand for the housing market for both owner-occupation, as well as rental. The increase is also meant to decrease the investment demand from local and foreign investors.

Here are the new ABSD rates as of 27 April 2023.

Based on the table above, there’s no denying that individuals who want to buy a property in Singapore need to fork out a lot of money, especially if it’s not their first property.

For instance, if you’re a Singaporean citizen buying your third property and it’s a S$2 million condominium unit, you need to spend S$600,000 in ABSD. If you’re a PR, you’d have to pay S$700,000. Meanwhile, foreigners and entities must pay S$1.2 million and S$1.3 million, respectively.  

By now, you may be wondering how to avoid additional buyer stamp duty? Here are some ways you can get around it.

While this tip doesn’t mean you avoid paying your ABSD Singapore, it will help you avoid paying your ABSD in cash. Paying in cash may take a hard hit on you, especially if you don’t have enough money in the bank. However, you can apply to use your CPF Ordinary Account balance for both your BSD and ABSD and get reimbursement from your CPF for the total amount you pay in cash afterward.

That said, it may be hard to pay for the total ABSD Singapore on your subsequent property investments since the amount is so high.

If you wish to avoid ABSD Singapore, this is one of the best tricks you can follow. Keep in mind that for some groups, you only have to pay the ABSD on second and subsequent properties.

You may think applying for a remission or refund is enough but remember that if you do this, you still need to pay the ABSD. This can put you back financially since we’re dealing with so much money. Another thing you should note is that applying for an ABSD remission usually only applies to married couples who purchase their next property jointly. This means that the property will both be under their names.

Therefore, unmarried couples or single individuals cannot apply for the remission if they buy another property without selling their first property first. 

It’s worth noting that if you are thinking about selling your first property before buying a new one, timing is key. Be careful and make sure you back a backup plan, whether it’s to move to a rented home before you buy your next property.

If there is at least a Singaporean citizen between a couple, then the spouse can apply for remission of ABSD. This is a way to ensure that Singaporean citizens who marry a foreigner or PR will not face any challenges to owning their home.

If you already have a property with your spouse, you can decouple your names to purchase a residential property under each of your names.

Decoupling involves one spouse buying the share of the other spouse. After this, you can have one property under each of your names. This tip also applies to private property owners who want to remove one of the spouses’ names from the owner list of the property.

Keep in mind that if you try decoupling, the spouse who buys out the property should refund the CPF monies used by the spouse. Not only that, they also need to shoulder the BSD portion of the transaction, as well as other fees involved like lawyer’s fees.

Other factors you should keep in mind include whether or not they should get a home loan as the only buyer.

If both you and your spouse want to save money and can’t afford to buy two residential properties, simply buy one with one person’s name on it. This way, you can de-couple even before you buy the second property.

When you are finally ready to get your next property, you can use the other person’s name to purchase it without having to worry about ABSD Singapore.

There are countries that are part of the free trade agreements. Citizens or permanent residents of these countries are exempt from the ABSD. The countries include:

• USA (citizens only)
• Norway
• Switzerland
• Iceland
• Liechtenstein

So what does this mean? They don’t have to pay ABSD Singapore for the first private property they buy in the country. Counterintuitively, PRs of Norway, Iceland, Liechtenstein, and Switzerland can skip the ABSD for their first private residential property, while Singapore PRs are charged 5% for the same property.

If you are keen on investing in real estate but want to avoid ABSD, simply purchase a commercial or industrial property. Alternatively, you may also purchase REITs.

You’ll be surprised at how far your money will go in other countries. Consider investing in a real estate property in another country. This can be your vacation house, or you can rent it out.

The new ABSD Singapore rates are definitely going to affect a huge part of the country’s population, especially those who want to buy more residential properties.

That said, the government is doing the best it can to regulate the property market. While it may be challenging to avoid ABSD Singapore completely, there are still several options available to investors and homeowners.

It is important to carefully consider each option and its potential consequences before making any decision. With proper planning and foresight, it is possible to navigate the property market and make sound investments while still maximising your money.

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