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Decoupling to bypass ABSD? Yay or nay?
Want to buy a second property, but don’t fancy the thought of forking out tens of thousands of dollars for your Additional Buyer’s Stamp Duty (ABSD)? Some property consumers have been known to consider an alternative: decoupling. This involves one spouse giving up their co-owner status, and becoming an “authorised occupier”.
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Decoupling: How it works for Singapore Property Buyers
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What does decoupling mean?
When someone gets together, they become a couple. If they are famous or infamous, they become “the couple”. When they decide to leave each other, they de-couple, or divorce.
When a couple buys a house, they buy it together and pay for it by cash, and property is fully paid, the ownership is: –
· Owner: Husband + Wife (They hold the title deed)
When a couple buys a house, pay the down payment and then borrow the rest from either HDB or the banks: –
· Mortgagors: Husband + Wife (Also known as owner, except that the bank still holds the title deed when there is an outstanding loan).
· Borrowers: Husband + Wife (They owe the banks as borrowers.)
Property: 3 (legal) ways to avoid paying ABSD
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As if properties in Singapore are not already crazily expensive, buyers must also shell out a pretty penny in stamp duty. In Singapore, all property purchases are charged Buyer’s Stamp Duty (BSD), calculated at 1% on the first $180,000, 2% on the second $180,000, and 3% on the rest of the property’s cost. But in December 2011, the Government implemented the Additional Buyer’s Stamp Duty (ABSD), one of several cooling measures used to curb property speculation.
Beating the Additional Buyer’s Stamp Duty
Property buyers and investors are well aware that on top of the basic Buyer’s Stamp Duty (BSD) payable on the purchase of a residential property, Additional Buyer’s Stamp Duty (ABSD) is also payable if you already own another residential property or you are not a Singapore citizen. This can add up to quite a hefty sum, and greatly reduces the profits which you may have been looking to receive from your property investment.
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How can you then plan your property purchases to minimise the amount which you may have to pay in taxes? In this article, we will give you pointers on how smart planning by a typical married couple can reduce ABSD liability.
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Decoupling to reduce or avoid ABSD: Costs, Savings & Potential Pitfalls
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