What you need to know about Additional Buyer Stamp Duties

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Additional Buyer Stamp Duties

 

Buying your own home in Singapore is a big deal, and a major life decision. It’s also one of those moments that really shape your life, especially if the property is bought as a home that you intend to stay in, or as an investment. As such, you need to know the basics about any additional costs you’ll have to bear in addition to just the cost of the property.  One of these costs is the Additional Buyer Stamp Duty. Beside ABSD, it is important to understand Total Debt Servicing Ratio (TDSR) and Seller Stamp Duties (SSD) too. If you’re wondering what it is, here are the answers to your questions:

What is the Additional Buyer Stamp Duty (ABSD) ?
The ABSD is a tax that you pay on top of the regular Buyer Stamp Duties levied on every house sale. It came into effect in 2011 and has since been revised once. The main reason the ABSD was introduced was to control the over appreciation of the residential properties market. The amount of ABSD you need to pay depends on several factors.
What determines the amount of ABSD that is to be paid?
Factors that determine the rate of ABSD you have to pay include your residency status, whether you have any previous properties, whether you’re buying as an individual or entity and the number of previous houses bought. Here are the factors in greater detail:

Individual or Joint Purchase – ABSD rates differ for individuals and those making joint purchases, whether as a married couple or unmarried associates. There is also a different rate is purchases are made as an entity, including unincorporated associations, trustees for a mutual trust fund, trust fund managers or companies buying under their company name.

Number of Previous Properties – The higher the number of previous properties owned, the higher the ABSD rate that has to be paid.

Residency Status – Singaporean citizens and permanents residents enjoy lower rates compared to foreigners and entities. Foreigner should read about Expat and Property Investment. If you’re applying for citizenship or PR status, then an approval must be obtained from the Immigration and Checkpoint Authority (ICA) as proof of your status.

What are the actual ABSD rates that have to be paid?
For an easy way to determine which rates you have to pay, you can refer to the table below:

BSD and ABSD Rates
 Profile of Buyer BSD RatesABSD Rates from 8 Dec 2011 to 11 Jan 2013ABSD Rates from 12 Jan 2013
Singapore Citizens (SC)1 buying first residential property1% on first $180,000

2% on next $180,000

3% for the remainder

 Not applicable Not applicable
SC1 buying second residential property Not applicable 7%
SC1 buying third and subsequent residential property 3% 10%
Singapore Permanent Residents (SPR)1 buying first residential property Not applicable 5%
SPR1 buying second and subsequent residential property 3% 10%
Foreigners (FR) and entities2buying any residential property 10%15%

 1  Whether owned wholly, partially or jointly with others.

2 An Entity means a person who is not an individual. It includes the following:

  • 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.

3  BSD and ABSD are to be rounded down to the nearest dollar.

(Source: IRAS)

 

As can be seen from the table, Singaporean citizens are not required to pay any ABSD when they buy their first homes.  This also applies to Singaporean couples, and couples where one of the spouse is a citizen and the other a permanent resident or foreigner. Certain nationalities are exempted too, including citizens of the USA, Iceland, Liechtenstein, Norway and Switzerland. On the other hand, foreigners and entities have to pay the highest rate, which is 15%.

ABSDs are payable within 14 days after signing the Sales and Purchase agreement or exercising the Option To Purchase, and sometimes the date of transfer if the first two are not applicable.
The ABSD was actually put in place to limit the role of property flippers (people who buy houses at a low price and sell them at an increased price) and investors from driving up property prices by buying up multiple properties. This scheme however, does exempt first time house buyers  from paying extra tax, keeping things more affordable for them.

3 Comments

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