Additional Buyer Stamp (ABSD) & Seller Stamp Duty (SSD) Explained

Since the introduction of Seller’s Stamp Duty (SSD) on 22 February 2010 and Additional Buyer Stamp Duty (ABSD) on 7 December 2011, there have been a number of revisions in the rates as the cooling measures intensify throughout the years.

This is the latest rate.

Seller’s Stamp Duty
• Holding period of 1 year : 16% of price or market value, whichever is higher
• Holding period of 2 years : 12% of price or market value, whichever is higher
• Holding period of 3 years : 8% of price or market value, whichever is higher
• Holding period of 4 years : 4% of price or market value, whichever is higher

Properties acquired before 20 Feb 2010 will not be subject to SSD.

Additional Buyer’s Stamp Duty

a) FR and *entities- 15% on the purchase or acquisition of any residential property.

b) SPR – 5% on the purchase or acquisition of their first residential property

SPR who already own# 1 or more residential properties 10% on the purchase or acquisition of another residential property.

c) SC – who already own# one residential property 7% on the purchase or acquisition of the second residential property.

– SC who already own# 2 or more residential properties 10% on the purchase or acquisition of another residential property.

# Whether owned wholly, partially or jointly with others.
* Entity means a person who is not an individual, and includes 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 and, in a case where the property conveyed, transferred or assigned is to be held as partnership property, the partners of the partnership whether or not any of them is an individual.

I have invited Ms. Dorothy Tay of LegalWorks Law Corporation to answer some of my questions to clear up some confusing facts of how both of it works. Legalworks is a boutique law firm that specializes solely in conveyancing and has lawyers of more than 20 years experience in the field. Ms. Dorothy Tay is the principle solicitor behind Legal Works.

LegalWorks Law Corp

Additional Buyer Stamp Duty (ABSD)

Q: Many people are very confused for a fact for this mix of spouse. When you have a Singapore Citizen (SC) and a Foreign (FR) Spouse. How much Additional Buyer Stamp Duty you are supposed to pay for your first matrimonial house?

General rule for purchase made by buyers of different profile is that the higher ABSD rate will apply. However ABSD remission (by way of a lower ABSD rate or full remission) may apply to co-purchase by a married couple involving a SC abd FR spouse purchasing their first matrimonial home. An application for remission of ABSD can be applied for and pending approval for remission, the SC- FR married couple need only pay the buyer’s stamp duty.

Q: How about purchase of a property by a Singapore Citizen (SC) and SPR?

From 12 January 203, SPR buying their first residential property on their own or jointly with SC are required to pay ABSD of 5%. However if both the SC and SPR do not own any other property and the matrimonial property is their first residential property owned by them, then an application for remission of ABSD can be applied for as stated above. If the purchasers are not a married couple, then the higher rate will apply.

Please see below for the other permutations:-

No of Properties No of Properties
Currently owned After Co Purchase ABSD Payable
SC1 – SPR 0 SC2 – SPR 1 7%
SC0 – SPR 1 SC1 – SPR 2 10%
SC1 – SPR 1 SC2 – SPR 2 10%
SC2 – SPR 0 SC3 – SPR 1 10%
SC2 – SPR 2 SC3 – SPR 3 10%

Q: Would a PR & Foreign spouse pay ABSD on PR Rate?

A SPR-FR married couple purchasing residential property will have to pay ABSD based on the FR rate of 15%.

Q: Are there any concessions to citizens of foreign country if they have signed a Free Trade Agreement (FTA) with Singapore? If there is, which are the ones that are treated as Singaporeans?

Nationals and/or Permanent Residents of the following countries who fall within the scope of the respective FTAs will be accorded with the same treatment as SCs.

Nationals and Permanent Residents of:-
• Iceland
• Liechtenstein
• Norway
• Switzerland

Nationals of:-
• United States of America

Such buyers are required to submit an application for remission so as to enjoy the same treatment as SCs. While ABSD payment can be withheld pending approval of remission, BSD cannot be withheld.

Q: What’s the difference between Exemption and Remission?

Exemption means the law does not require you to pay. Remission means an application has to be made to the authorities to see if payment can be waived or reduced.

Q: When are you supposed to pay ABSD? Can we delay paying ABSD?

ABSD is payable within 14 days from the date of contract; ie within 14 days from date of the Sale and Purchase Agreement or within 14 days from the date of exercise of Option.

Only if there is an application for remission of ABSD can a buyer delay paying the ABSB pending reply from the authorities.

Q: When any SC has just sold their house, can they buy another place whilst waiting for the completion of the sale of their house without paying ABSD?

Yes if prior to their exercise of Option for their new place, the buyer of their existing house exercises the Option and the Option is stamped

Evidence of the exercised Option and the certificate of stamp duty would have to be produced at the point of stamping of his Option to purchase the new place.

Q: If the above answer is yes, what happens if the first sale transaction fails? Will IRAS require them to pay ABSD?

Yes, IRAS will require them to pay the ABSD if the first sale transaction fails.

Q: Many couples decouple their joint tenancy homes in order to avoid paying ABSD, is that advisable?

This depends on whether there is any cost savings. If the new property to be purchased is of a very high value, then the cost savings would be greater and worth the exercise.

Of course once the property is de coupled and transferred to one party’s name, that party also becomes the absolute owner and can in his/her Will give the property to another person. The right of survivorship under the joint tenancy will no longer exist.

Q: Do they have to pay ABSD on the full share of the home for one party when you’re decoupling? Is there concession for it?

ABSD is payable on the share purchased if the party buying it owns more than 1 property or is a PR.

So if the party is buying 50% share and owns more than 1 property or is a SPR, ABSD is payable on the value of the 50% share base on the status of the party buying.

Example
Value of Property is $1,000,000.00
50% share means purchase price is $500.000.00
Purchaser would have to pay stamp duty on the $500,000.00 of $9,600.00
Purchaser if SPR would have to pay ABSD of 5% on $500,000.00 of $25,000.00

Q: Do you have to pay ABSD on inherited properties by way of will?

Yes properties inherited under a Will is subject to ABSD depending on the profile of the beneficiary

Q: Do you pay ABSD if you are buying a property under company? What if it’s a local company with full local shareholders?

ABSD of 15% is payable for purchase of residential property under a company regardless of who the shareholders are.

Seller Stamp Duty (SSD)

Q. When are you supposed to base your Seller Stamp Duty date on?

To determine if sellers’ stamp duty is payable; you need to look at the date your contract was formed when you first purchased your property and the date your new buyer exercises the Option to Purchase.

Hence if your date of contract was 1 January 2013 and you contract to sell your property and your buyer exercises the Option on 15 February 2015; you will have to pay seller’s stamp duty based on the 3rd year rate of 8%. If your buyer’s exercise of Option date is 5 March 2013, the you would have to pay the seller’s stamp duty of 16% as it is within the 1st year.

See below
1 January 2013 to 31 December 2013 = 1st year 16%
1 January 2014 to 31 December 2014 = 2nd year 12%
1 January 2015 to 31 December 2015 = 3rd year 8%
1 January 2016 to 31 December 2016 = 4th year 4%

Q. Is there a way to check what is the date of contract to determine if the seller has to pay seller’s stamp duty when he sells?

If you do not have a copy of the contract for your original purchase, you can buy a copy of the title search from the Singapore Land Authority, which will normally show the date of contract.

From there you can compute whether you are caught by the seller’s stamp duty provisions or not.

Q. It there a way to prevent the buyer from exercising the Option before the expiry of the seller’s stamp duty timeline?

Your Option expiry date can be stated as a fixed date exercise .

Option can state that the offer remains open for acceptance in the manner prescribed in the Option before 4pm on [date] only. For avoidance of doubt, the Purchaser shall not be entitled to exercise the Option before [date].

Q: When is SSD supposed to be due? Can we delay SSD Payment?

Seller’s stamp duty is payable within 14 days of the new buyer’s exercise of Option for the purchase of the property.

Any delay would be subject to written approval from the authorities and usually interest is payable for late payment.

Q: For decoupling cases, do they have to pay SSD on their share should they decide to do it?

Same rules will apply for the seller of the part share if the sale is carried out within the period where SSD is payable. SSD will be payable on the share transferred.

Q: Do you have to pay SSD when you inherit a property by way of will?

Yes SSD is payable. The material date of acquisition shall be the date when the property or any beneficial interest in the property passes to the beneficiary.

Dorothy and her team can be reached at +65 63251722 or through their emails for any conveyancing legal advise:-

Dorothy dorothy@legalworks.sg
Calvin thean@legalworks.sg
Ying Wee yingwee@legalworks.sg
Jeannie jeannie@legalworks.sg
Nana nana@legalworks.sg
Kelly kelly@legalworks.sg

Address
Legal Works Law Corporation
10 Anson Road #19-04 International Plaza
Singapore 079903

 

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Written by Benson Koh
Benson is a professional real estate realtor with over 11 years of experience specializing in all forms of real estate consultancy and brokeraging of different segments from regal homes to commercial spaces. Also a boutique developer, he manages both SRI5000 Developments which concentrates on landed homes as part of his land bank segment and Singapore Realtors Inc (SRI), a real estate agency which has over 7 years of group experience. You can reach him here via various channels. [ Facebook | Linkedin | Twitter | RSS Feed ]