Investing in a second property in Singapore can be financially rewarding, but Additional Buyer’s Stamp Duty (ABSD) adds a significant cost. This article unveils strategic tips on how to avoid ABSD, guiding you on how to buy a second property in Singapore without ABSD effectively. Let’s delve into crucial insights on avoiding ABSD Singapore.
Understanding ABSD
The Additional Buyer’s Stamp Duty is imposed on Singaporeans and Permanent Residents purchasing additional residential properties, as well as foreigners buying any residential property. Knowing the rates is essential for planning:
- Singapore Citizens: 12% for the second property, 15% for the third and subsequent properties.
- Singapore Permanent Residents: 5% for the first property, 15% for the second and subsequent properties.
- Foreigners: 20% on any property purchase.
Legal and Effective Ways to Avoid ABSD
Decouple Ownership
Decoupling involves transferring ownership of the first property entirely to one spouse, freeing the other to purchase a second property without incurring ABSD. This means restructuring ownership so that each partner solely owns one property.
Buying Under a Trust
Purchasing the second property under a trust for a child is another method. This approach requires a large initial investment, as there must be no mortgage on the property, and the child becomes the legal owner.
Utilizing Regulations for Foreigners
Foreigners married to Singaporeans can buy a second property without ABSD if the home is purchased under the spouse’s name. This approach leverages beneficial residency criteria.
Step-by-Step Guide
- Check Ownership Status: Confirm current property ownership and evaluate eligibility for decoupling.
- Financial Assessment: Ensure funds are sufficient for down payments, using cash or trust-based purchases.
- Seek Legal Advice: Consult a lawyer to understand the implications and process for decoupling or trust purchases.
- Execute the Plan: Proceed with the chosen strategy while keeping necessary documentation for regulatory verification.
Read more about Avoiding ABSD Singapore here.
FAQs: Avoiding ABSD in Singapore
What is decoupling in property purchase?
Decoupling involves transferring ownership of a jointly-owned property to one spouse, allowing the other to buy a second property without incurring ABSD.
Can foreigners avoid ABSD in Singapore?
Yes, foreigners married to Singaporeans can purchase a second property in the Singaporean spouse’s name without incurring ABSD. Other methods include buying under a trust for a child.
Are there any risks involved in these strategies?
Yes, decoupling can affect loan eligibility and borrowing limits. Trust purchases require significant upfront capital and legal considerations. Always consult with a real estate expert or lawyer before proceeding.
Is there a limit on the number of properties through this strategy?
Strategies like decoupling and trust purchases primarily aim at the next property purchase. Further investments may need additional expertise and planning.
Employ these strategic tips on how to avoid ABSD and navigate the intricate process of how to buy a second property in Singapore without ABSD. These insights and frequently asked questions can aid in avoiding ABSD Singapore while maximizing your property investment opportunities.