For many locals and foreigners, the real estate landscape in Singapore presents both opportunities and challenges. One common concern is the Additional Buyer’s Stamp Duty (ABSD), which can add a significant cost to purchasing property. However, there are strategies to purchase a second property without incurring this duty. Let’s delve into how to avoid ABSD and effectively plan to buy a second property in the Lion City.
Understanding Additional Buyer’s Stamp Duty (ABSD)
The ABSD is a tax imposed by the Singapore government to curb speculative investments and keep housing affordable for locals. The rates range depending on the buyer’s residency status and the number of properties owned. Foreigners and corporate entities often face higher ABSD rates compared to Singaporean citizens and Permanent Residents.
Buying Under a Trust
One strategy for avoiding ABSD Singapore is to purchase property under a trust for a minor child. This method often involves setting up a trust where the property is held till the child reaches a particular age. Since the child, being a minor, typically does not own any other property, the ABSD can be avoided. Consult a legal expert to navigate the intricate details and ensure compliance with regulations.
Transferring Ownership
Another way on how to buy second property in Singapore without ABSD is transferring ownership of the first property to a spouse. This is especially useful if the spouse qualifies for lower ABSD rates or no ABSD at all. Legal and financial advice should be sought to understand all implications and procedures involved in transferring ownership.
Decoupling Property Ownership
Decoupling refers to the process where co-owners of a property transfer the share of ownership completely to one party. For instance, a married couple who jointly owns a property can have one spouse transfer their share to the other spouse. This allows the spouse without property ownership to purchase a second property without incurring ABSD. Due diligence and professional advice are essential to ensure smooth execution of this strategy.
Purchasing New Launch Properties
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Consider new launches where developers occasionally offer ABSD absorption schemes. Under this scheme, the developer absorbs the ABSD, providing relief to the buyer. Such offers may be time-sensitive and subject to developer criteria, so staying informed about market opportunities is advantageous.
Ensuring Compliance with Legal Provisions
While exploring methods on how to avoid ABSD, it’s crucial to adhere to Singapore’s legal framework meticulously. Incorrect or deceptive practices can lead to penalties, including hefty fines and legal consequences. It’s prudent to engage experienced real estate professionals, legal advisors, and financial planners to craft strategies aligning with personal circumstances and regulatory requirements.
In conclusion, buying a second property in Singapore without ABSD is achievable with informed strategies and expert guidance. Utilizing mechanisms like trusts, ownership transfer, decoupling, and new launch property promotions can mitigate or eliminate the impact of ABSD. Ensuring legal compliance and thorough planning are key to successfully navigating the intricacies of Singapore’s real estate market.
