The real estate market in Singapore can be a labyrinth, especially for those considering purchasing a second property. One of the biggest concerns for such buyers is the Additional Buyer’s Stamp Duty (ABSD). In this article, we’ll delve into how to avoid ABSD and the legal ways to buy a second property in Singapore without incurring additional costs.
What is ABSD and Why Is It Important?
ABSD is a measure implemented by the Singaporean government to cool the property market. It is an additional tax imposed on top of the standard Buyer’s Stamp Duty (BSD) for Singapore permanent residents (PRs) and foreigners purchasing residential property. Understanding ABSD is crucial for anyone looking to invest in property in Singapore.
Strategies for Avoiding ABSD in Singapore
While ABSD can seem overwhelming, there are several strategies to legally minimize or avoid this tax:
1. Decoupling
Decoupling involves one spouse transferring their share of an existing property to the other spouse. This way, the non-owner spouse can purchase a second property without incurring ABSD. This tactic works best for married couples who trust each other impeccably.
2. Buying Under a Trust
Another approach is to buy property under a trust for your children. The trustee (usually a parent) holds the property on behalf of the beneficiary (the child). This method is commonly used by wealthy families looking to avoid ABSD and plan for intergenerational wealth transfer.
3. Foreign Entities and Dual Taxation Agreements
Investing through a foreign entity or jurisdiction with a favorable dual-taxation agreement with Singapore can help reduce or eliminate ABSD. However, this method requires detailed legal and tax planning.
Critical Steps to Buy a Second Property in Singapore Without ABSD
For those seriously looking into how to buy a second property in Singapore without ABSD, consider the following critical steps:
Step 1: Evaluate Your Current Ownership
Assess whether you can restructure the ownership of your existing property to make a second purchase without incurring ABSD.
Step 2: Legal and Financial Consultation
Seek advice from legal experts and financial advisors. They can provide guidance on the best approaches to restructure ownership or invest in properties that help you avoid ABSD.
Step 3: Execute the Plan
Once you’ve settled on the best strategy, proceed to execute it with the help of your advisors. Ensure all legal requirements are met to avoid any complications.
Conclusion
Navigating the labyrinth of Singapore’s property market requires strategic planning and due diligence. By leveraging strategies such as decoupling and buying property under a trust, potential investors can explore avoiding ABSD in Singapore. Always seek professional advice to ensure compliance with all legal requirements while optimizing your investment.
Read more about How to avoid ABSD here.
By understanding how to avoid ABSD and implementing the right strategies, you can make informed decisions that align with your financial goals.
