Additional Buyer’s Stamp Duty (ABSD) & Seller’s Stamp Duty (SSD).

In March 2019, Singapore has announced the most expensive city in the world to live in (alongside Paris and Hong Kong). Yet the property is still an asset people will invest in because of the potential it possesses.

If you’re investing in your 2nd (or subsequent) property, here are 7 things to know about Additional Buyer Stamp Duty (ABSD): who is liable to pay it, the exemptions, how to beat the tax, and so on.

Also read: 2 Key things to look out for when you get your 2nd home loan

1. What is the Additional Buyer Stamp Duty?

The Additional Buyer Stamp Duty (ABSD) applies to owners who purchase their second and subsequent property. It’s an extra tax the government imposes on residential properties (e.g., condominiums, private estates, HDB flats, shophouses with live-in residences, etc.)

 

2. The Purpose of ABSD

ABSD acts as a cooling measure to curtail the booming property market. Given that real estate prices skyrocketed by 9.1% in 2018, the Singapore government needed to put in place something that would prevent housing prices from going up further.

If the increased demand had been left unchecked, the upward trend would have led to a housing bubble. In such a bubble, many are likely to commit to loans they cannot afford, which increases the risk of foreclosures. When the bubble bursts, it would’ve led to more foreclosures, an oversupply of houses, and low demand

 

3. Who has to pay the ABSD?

You have to pay ABSD if you are a…

• Singaporean citizen purchasing a 2^nd or subsequent residential property
• Permanent Resident (PR) purchasing your 1^st and subsequent residential property
• Foreigner purchasing your 1^st and subsequent residential property (Except for citizens from the USA, Iceland, Liechtenstein, Norway or Switzerland)

That’s right: for PRs and foreigners, even if this is your first property purchased in Singapore, you are liable to pay for ABSD.

As long as you own a shared interest in a property (even if that’s an investment property with your siblings), you are liable to pay for ABSD. Any other property purchased will be considered as your 2^nd property. If paying the ABSD is an issue, you may want to rethink keeping your stake in the shared property.

 

4. Updates in ABSD Regulation

With the new regulations in play, homeowners can expect a 12% or higher ABSD rate on the current valuation of the property or the selling price, whichever is higher.

The current ABSD rates are as follows:

 

Case Study 1:

Sam is a Singaporean citizen looking to purchase his 2^nd residential property for investment purposes. The property is valued at $500,000. He agrees to buy it at $550,000.

Case Study 2:

Martha is a Malaysian PR looking to purchase her 2^nd condominium to rent out. The property is valued at $1,200,000. After negotiations, she purchases it at $1,050,000.

5. How can I pay for ABSD?

ABSD can be paid via NETS, cheque, or cash order through the e-Stamping Portal. Other avenues include IRAS e-terminals or specific branches of SingPost Bureaus (Shenton Way, Novena, Chinatown, and Raffles Place).

While CPF (Ordinary Account) funds can be used to pay your ABSD, you have to pay out of your pocket first before getting reimbursed from your CPF account.

 

6. When must I pay the ABSD?

The deadline to pay is within 14 days for contracts signed in Singapore, and 30 days for contracts signed overseas. You’ll want to pay punctually to prevent paying the hefty penalty (which can be 4 times your ABSD!).

 

7. Exemptions from ABSD in Singapore

You won’t have to pay the ABSD if:

• You sign the agreement to sell your current property before getting the Option to Purchase (OTP) on your new property
• You’re downgrading from private property to a resale flat. However, the private property must be sold within six months – though you can extend this to one year if you get approval from the relevant authorities.
• Your properties are located outside of Singapore (subject to the laws of the respective country)

 

Moving Forward:

ABSD can eat into your finances. One of the most common ways to avoid the tax is decoupling – essentially, transferring your share of the property to your spouse. Afterward, you’ll be free to purchase your 2^nd property as though it’s your first.

Your spouse will have to pay the Buyer Stamp Duty and all the associated legal fees when they take over your share, but this is generally far cheaper than the ABSD. 

(Read also: Can I Transfer My Share of the House to My Spouse/Child to Avoid ABSD?)

Before making any purchases of residential properties in Singapore, it is important to be aware of the taxes that one is subjected to before making a major financial commitment. Below are some important taxes that a home buyer or seller should take note

在新加坡购买任何住宅物业之前，重要的是要在做出重大财务承诺之前了解其所要缴纳的税款。 以下是购房者或卖方应注意的一些事项。

Buyer's Stamp Duty (BSD) 买方印花税

Based on the purchase price or market value, whichever is higher	Percentage
第一 First $180,000	1%
第二 Next $180,000	2%
之后 Next $640,000	3%
Remaining amount	4%

The Buyer Stamp Duty is applicable to all buyers purchasing a residential property in Singapore, including new launch condominiums, HDBs and uncompleted projects.

买方印花税适用于在新加坡购买住宅物业的所有买方，包括新推出的公寓，建屋局和未完成的项目。

For a residential property of price or market value of $1 million or below, the buyer stamp duty can be calculated using the formula below:

【 对于价格或市场价值为100万新元或以下的住宅物业，可以使用以下公式计算买方印花税 】

BSD = (3% x Property Price) - $5,400

For a residential property of price or market value above $1 million, the buyer stamp duty can be calculated using the formula below:

【 对于价格或市场价值超过100万新元的住宅物业，可以使用以下公式计算买方印花税：】

BSD = (4% x Property Price) - $15,400

Additional Buyer's Stamp Duty (ABSD)

附加买方印花税

Profile Of Buyer	ABSD Rates
	1st Property 第一房产	2nd Property 第二房产	3rd Property & Subsequent Purchase 第三后以上房产
Singapore Citizens  新加坡公民	-	12%	15%
Singapore Permanent Residents 新加坡永久居民	5%	15%	15%
Foreigners 外国人买家	20%	20%	20%
Corporate Entities 企业、公司	25%	25%	25%

Foreigners under Free Trade Agreements (FTAs) will be accorded with the same treatment as Singapore Citizens Nationals & PRs of Switzerland, Liechtenstein, Norway, Iceland & Nationals of United States of America.

根据自由贸易协定（FTA）规定的外国人将获得与瑞士，列支敦士登，挪威，冰岛和美利坚合众国的新加坡公民和PR相同的待遇。

Seller's Stamp Duty (SSD) 卖方印花税

- Purchased on and after 11-Mar-2017 【 在2017年3月11日及之后购买】

Holding Period	SSD payable
Up to 1 Year 第一年	12% of consideration or value, whichever is higher 【估价或价值，以较高者为准】
Up to 2 Years 第二年	8% of consideration or value, whichever is higher 【估价或价值，以较高者为准】
Up to 3 Years 第三年	4% of consideration or value, whichever is higher 【估价或价值，以较高者为准】
More than 3 Years 三年后	No SSD Payable 【无需支付】

Seller's Stamp Duty (SSD) - Purchased between 14-Jan-2011 to 10-Mar-2017

Holding Period	SSD payable
Up to 1 Year  第一年	16% of consideration or value, whichever is higher  【估价或价值，以较高者为准】
Up to 2 Years  第二年	12% of consideration or value, whichever is higher 【估价或价值，以较高者为准】
Up to 3 Years  第三年	8% of consideration or value, whichever is higher 【估价或价值，以较高者为准】
Up to 4 Years  第四年	4% of consideration or value, whichever is higher 【估价或价值，以较高者为准】
More than 4 Years	No SSD Payable【无需支付】

The Seller Stamp Duty (SSD) is applicable to residential property buyers who sold their property within 3 years upon acquiring the property.

The SSD was first implemented in the year 2011. SSD is payable if a property owner purchased the property on or after 14th January 2011 and sells it within 4 years. Property owners who have acquired their residential property on or after 11th March 2017 will only need to hold the property for 3 years before selling if they want to avoid SSD.

Visit IRAS website for more information.