In Singapore, it is generally almost everyone’s aspiration to buy private resident properties. Whether it is for own stay or as a form of investment, private residential properties are always much sought after. On 7 December 2011, the Singapore government introduced the Additional Buyer’s Stamp Duty (ABSD) with the objective to moderate the high demand for private residential properties in Singapore. Property investors regionally are attracted to Singapore because of our political stability, low mortgage interest rates, and strong Singapore Dollar.

absd in singapore

Let’s look into Additional Buyer Stamp Duty.

HISTORY OF ADDITIONAL BUYER’S STAMP DUTY

Not long after the Global Financial Crisis, our Singapore property started a V-Shaped recovery. Property transaction volumes and prices were increasing at unbelievable speed. Everyone was again talking about buying property and speculators are in the market to flip properties.

A price recovery in general is a good sign but not at breakneck speed. It took about a year for the property price index to recover back to the levels before the Global Financial Crisis and beyond. With a potential bubble forming, our Singapore Government acted swiftly to implement the first Additional Buyer’s Stamp Duty on 7th December 2011.

After the Additional Buyer’s Stamp Duty was first introduced with effect from 8th December 2011, it was revised twice and taking effect on 12 Jan 2013 and 6th July 2019 respectively. 

singapore property price index

Property Price Index with crisis indicator.

We were quite surprised that after a revision of the Additional Buyer’s Stamp Duty, the property price index still keeps increasing. This prompted the government to implement the 3rd revision which took effect on 6th July 2019.

From the percentage point of view, our Singapore government recognised the huge demand for Singapore residential properties by foreign investors and funds thus the heavy weightage levied on them.

Singapore Permanent Residents were also levied but at a lower rate for their very first property. Singaporeans subsequently have to pay the Additional Stamp Duty for their second or more properties. Singaporean buying their matrimonial home or first property are not affected.

Property buyers can refer to the table below for a clear understanding of what are their liable Additional Buyer’s Stamp Duty rates.

FOREIGNERS ELIGIBLE FOR ADDITIONAL BUYER’S STAMP DUTY EXEMPTION

While it is relatively safe to mention that all foreign nationals are liable for the Additional Buyer’s Stamp Duty. At the point of writing this article, there are 5 countries that are exempted from this policy. Singapore has Free Trade Agreements (FTAs) with these countries.

five nations

Five nations that are exempted from Additional Buyer Stamp Duty.

Apart from citizens or Permanent Residents from 5 countries, all other foreign nationalities are liable to pay Additional Buyer’s Stamp Duty. Under the respective Free Trade Agreements (FTAs), the countries will be treated the same Stamp Duty treatment as Singapore Citizens:

  1. Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland
  2. Nationals of the United States of America

ADDITIONAL BUYER’S STAMP DUTY REMISSION FOR MARRIED COUPLE

There are generally 2 methods that a married couple comprising of at least ONE Singapore Citizen that is purchasing a matrimonial home. To avoid any misunderstanding, a matrimonial home will be a property that must be CO-OWNED by the married couple (cannot be 1 ownership) and neither of them must have any other properties under their names. To help you better understand the remission policies, please see the general examples below.

ADDITIONAL BUYER’S STAMP DUTY REMISSION FOR MARRIED COUPLE

There are generally 2 methods that a married couple comprising of at least ONE Singapore Citizen that is purchasing a matrimonial home. To avoid any misunderstanding, a matrimonial home will be a property that must be CO-OWNED by the married couple (cannot be 1 ownership) and neither of them must have any other properties under their names. To help you better understand the remission policies, please see the general examples below.

MARRIED COUPLE (COMPRISING OF AT LEAST ONE SINGAPORE CITIZEN) WITH NO PROPERTY

This is a pretty straight forward scenario but I still do get a lot of questions on this. As long at least one party of the married couple is a Singaporean Citizen, they can buy a private residential property without paying any Additional Buyer’s Stamp Duty regardless of the profile of the other party. During the conveyancing stage, the lawyer acting for them will apply with IRAS.

MARRIED COUPLE (COMPRISING OF AT LEAST ONE SINGAPORE CITIZEN) WITH EXISTING PROPERTY

In some cases, a married couple may be upgrading or relocating to another property and they need to secure a property first before selling their existing property. When they purchase a property, resale or new launch, they are considered to be buying a second (or more depending on their existing ownership status).

So when the married couple exercises or signs on the Sales and Purchase (S&P) Agreement, they are required to pay the Additional Buyer’s Stamp Duty plus the Buyer’s Stamp Duty within 2 weeks. The amount payable will strictly on the higher tier ABSD payable of the couple.

For example, if the husband has only 1 property and the wife has 2, the Additional Buyer’s Stamp Duty will be based on 2 properties which will be 15% as the next home they are buying will be her third property.

The key element is that the married couple MUST dispose of all properties they have whether jointly or individually held within 6 months from the date of purchase (exercise date) for resale properties or the earlier of TOP/CSC date for buildings under construction.

Upon the successful sale of the existing property (or properties), the married couple can then apply to Inland Revenue Authority of Singapore (IRAS) for full remission of their Additional Buyer’s Stamp Duty paid.

rates and computation of absd rates

Additional Buyers Stamp Duty Rates (Source from IRAS)

If you are still unsure about what is your Additional Buyer’s Stamp Duty obligations, feel free to connect with me. I will share with you my case studies and also guide you through the process.

In Summary

Understanding Additional Buyer’s Stamp Duty is not difficult, it is probably because of the lack of exposure to it causes uncertainty among buyers. Rest assured if you cannot remember, you can speak to your trusted real estate salespersons to advise you accordingly or read this article again.