When you buy a property in Singapore, you’re subjected to Buyer’s Stamp Duty (BSD). And, depending on certain criteria (e.g. your residency status, the number of properties you own), you may have to pay another type of tax, known as Additional Buyer’s Stamp Duty (ABSD).
The April 2023 property cooling measures saw ABSD rates adjusted again. Most notably, the ABSD rate for foreigners buying any property in Singapore doubled from 30% to 60%. This marks the third round of property cooling measures since December 2021.
For those who want to invest in property, this ABSD rate revision is ‘bad news’. They now have to pay a higher tax to own multiple residential properties in Singapore. For some, purchasing an overseas property could be an alternative to expanding their real estate portfolio without having to incur ABSD.
Whether you’re a local investor or a foreigner looking to purchase property in Singapore, here’s all you need to know about ABSD in Singapore.
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What Is Additional Buyer’s Stamp Duty?
ABSD in Singapore is a tax that’s levied on top of BSD. It’s computed based on the valuation or the selling price of the property, whichever is higher.
What Are the Current Additional Buyer’s Stamp Duty Rates in Singapore?
ABSD amount (rates on/after 27 April 2023)
SCs buying their first property
SCs buying their second property
SCs buying their third and subsequent properties
SPRs buying their first property
SPRs buying their second property
SPRs buying their third and subsequent properties
Foreigners buying any property
Entities (companies or associations) buying any property
Trustees for any residential property
Housing developers for any residential property
35% (additional 5%; non-remittable)
The April 2023 property cooling measures saw hikes in the ABSD amounts payable. The ABSD percentages shown in the tables above will apply to the property’s purchase price or market value, whichever is higher.
How Is ABSD Calculated?
For instance, say a property is valued at $1 million but the selling price is $1.1 million. Assuming that you’re a Singapore Citizen, and you’re buying your second property, you are subjected to an ABSD rate of 20%. So, the ABSD amount that you’ll need to pay is $1.1 million x 20% = $220,000.
If a property is purchased by buyers of different profiles, then the ABSD will be calculated based on the buyer profile with the highest ABSD rate.
I’m Buying a Property With Someone Else: How Does Additional Buyer’s Stamp Duty Work?
When you’re buying a property with someone else/with different profiles, different ABSD rates might apply to both of you. If this is the case, then the higher ABSD rate will be used. An example shown below demonstrates how it works:
Your spouse’s properties
Two condo units (sole owner)
Terrace house (joint owner)
Terrace house (joint owner)
Let’s say you and your spouse are Singaporean. You have no property while your spouse currently owns two properties. You are both intending to purchase a terrace house together.
With the co-purchase of this new terrace house unit, your spouse will own a total of three properties. The ABSD rate applied for them will be 30%. On the other hand, you will only own one property after the joint purchase. Even though this is your first property, the ABSD payable is based on your spouse’s profile. So, there will be an ABSD rate of 30% will apply. If you are confused, read more here.
To save yourself from any price shock when buying your property, it would be good to accurately calculate your ABSD amount prior. PropertyGuru Finance has an easy-to-use stamp duty calculator that gives you a breakdown of how much stamp duty you’ll need to pay, on top of your actual housing price.
Why Was Additional Buyer’s Stamp Duty Introduced?
December 2011: ABSD was introduced to manage the surge in demand for property
January 2013: ABSD rates were increased, and more buyer profiles were included to be liable for the tax
July 2018: ABSD rates increased again
December 2021: ABSD rates were increased for second and subsequent purchases, for foreigners and entities
April 2023: ABSD rates were increased again for second and subsequent purchases, foreigners, entities, and trustees. ABSD rates remained unchanged for housing developers
ASBD was first introduced in December 2011 as a property cooling measure to discourage foreigners and entities from purchasing residential properties, especially multiple properties. In other words, it was introduced to manage demand for residential properties and to promote a sustainable housing market.
ABSD rates were increased further in January 2013, along with introducing new buyer profiles that would be liable for ABSD. Property speculation dropped after ABSD was implemented, and foreign buyers who were interested in investing in Singapore’s property market were deterred by the high ABSD rates.
Then in July 2018, both the BSD and ABSD increased again, and additional cooling measures like the Total Debt Servicing Ratio (TDSR) and Seller’s Stamp Duty (SSD) saw the volume of property transactions drop rather significantly.
On 16 December 2021, another round of cooling measures was announced. Among them, ABSD rates increased. The latest round of property cooling measures took effect on 27 April 2023, with ABSD rates being adjusted upwards again.
The three rounds of property cooling measures announced since December 2021 reaffirm the Singapore government’s commitment towards prioritising housing for owner-occupation. Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group, notes that first-time Singaporean buyers remain unaffected and PRs buying their first property did not see an adjustment to the existing 5% ABSD tax.
“Foreign investors are most affected by the April 2023 property cooling measures and will be deterred from buying property as they are the worst hit. The previous December 2021 ABSD adjustment of 30% was already considered to be high for foreign investors, and the latest hike will probably push these buyers to recalibrate their positions.
That said, most foreign buyers purchase property in Singapore for wealth preservation with a longer investment horizon in mind. Buyers with deep pockets may still enter the market, but they will put downward pressure on asking prices.”
In light of these changes, he also postulates that smaller units and the CCR market could see slower sales and conversions. But after an initial kneejerk reaction, little impact is likely to be observed on home purchases in the range of $1.8 million to $4 million in the RCR and OCR. This is due to the still-robust demand from HDB upgraders as well as households being in a stronger position than before (in terms of cash liquidity) due to intergenerational wealth transfers.
Definition of ‘Residential Property’ for Additional Buyer’s Stamp Duty
Let’s understand what’s defined as ‘Residential Property’. Residential properties are those used as homes. The most obvious examples would include HDB flats, condominiums, bungalows, and terrace houses (and similar types).
Shophouses with living quarters, as well as HDB void deck shops that have an upper floor designated for residential use, will also be considered residential property. Regarding overseas property purchases, these properties are not included in the property count for ABSD purposes.
Definition of ‘Entity’ for Additional Buyer’s Stamp Duty
An entity would refer to someone who isn’t an individual, and is defined by the following criteria:
An unincorporated association
A trustee for a collective investment scheme when acting in that capacity
A trustee-manager for a business trust when acting in that capacity
The partners of the partnership whether or not any of them is an individual, where the property conveyed, transferred, or assigned is to be held as partnership property
Are There Any Additional Buyer’s Stamp Duty Exemptions?
There are some situations in which you won’t need to pay ABSD, such as:
When you’ve already contracted to sell your current residential property before you sign the Option to Purchase (OTP) for your new one
When you’re downgrading from private property to an HDB resale flat
Although not technically considered an ‘exemption’, some families go for dual-key condo units, which are sold as one property (hence no ABSD levied), but feature two separate homes (a main unit and sub-unit).
Some also consider decoupling, which is when co-owners ‘split up’ and transfer ownership of the shared home to one half of the couple. But while decoupling is not illegal, doing so for tax evasion is. Recently, IRAS has announced it will conduct regular audits to prevent the occurrence of “contrived or artificial” arrangements and will reward whistle-blowers who call out private property buyers who exploit the “99-to-1” scheme to evade ABSD tax with up to $100,000.
Additionally, under the respective Free Trade Agreements (FTAs), Nationals and Permanent Residents of Iceland, Liechtenstein, Norway, Switzerland and the United States of America will be treated the same as SCs. In other words, you won’t need to pay ABSD for your first property purchase. Your legal representative can e-Stamp via the e-Stamping portal on IRAS’s website to apply for remission.
Additional Buyer’s Stamp Duty Remission for Foreigners Married to Singaporeans
Now, although we’ve indicated earlier that ABSD is always levied on foreigners and Permanent Residents, there’s one instance where these individuals won’t need to pay it. If you’re a foreigner or Permanent Resident who’s married to a Singaporean, and you don’t own any residential property, you don’t need to pay ABSD.
You can also get an ABSD refund if you’re moving house as a married couple. To qualify for the refund, the property that you paid ABSD for needs to be sold within six months of you buying the second. You can view the full terms and conditions on IRAS’s website.
How to Pay Additional Buyer’s Stamp Duty in Singapore
You can make payment for your ABSD online through the e-Stamping Portal using NETS, a cheque, or a cashier’s order.
Alternatively, you can also make payment at IRAS Surf Centre e-Terminals, or SingPost Service Bureaus (located in Chinatown, Novena, Raffles Place, and Shenton Way). These stamp duties need to be paid in full, and you won’t be able to pay them via instalments.
You can make use of your CPF to pay ABSD. Once you’ve paid these duties, you can get a reimbursement from your CPF account.
Note that ABSD needs to be paid within 14 days of the sale and purchase agreement being signed. If your sale and purchase agreement was signed overseas, the deadline is 30 days after the agreement was received in Singapore.
Are There Any Penalties for Late Additional Buyer’s Stamp Duty Payment?
Delay in payment
Penalty for late ABSD payment
Up to three months
$10 or an amount equal to the BSD and ABSD payment, whichever is higher
Exceeding three months
$25 or an amount equal to four times the BSD and ABSD payable, whichever is higher
If ABSD is not paid by the deadline, you will get a Demand Note reminding you to make payment. This letter will also inform you of the penalty that you’ve incurred for missing the deadline.
IRAS may appoint your bank, employer, tenant, or lawyer to pay the outstanding stamp duty on your behalf. In serious cases, legal action may be taken to recover the outstanding amount.
Should You Try to Avoid Additional Buyer’s Stamp Duty?
Most Singaporeans tend to view owning property as a good investment move. Seen either as a way to earn passive income through collecting rent or as a way to park wealth in a ‘safe haven’, owning multiple properties is a goal many have to financially secure themselves. This attitude towards owning multiple properties comes as no surprise, considering how property prices have remained resilient over the years.
Currently, property prices are at a high for all property types. With the latest round of April 2023 property cooling measures, we have no doubt that the raised ABSD rates will be a hotly debated topic among property buyers and investors. Not many are fans of the measure, and unsurprisingly so: it is, after all, an extra tax meant to discourage buyers by increasing the cost of property in Singapore and foreigners and entities for speculating.
This is why many property buyers look for exemptions and ‘loopholes’ to avoid paying the extra tax. These could very well work, but in most cases, it may be easier and cheaper to simply pay the ABSD. Not to mention, while you may find legal ways to ‘avoid’ paying ABSD by exploiting ‘loopholes’, tax evasion is still illegal.
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