Definition:
Additional Buyer’s Stamp Duty (ABSD) is a tax imposed on top of the standard Buyer’s Stamp Duty (BSD) for certain property buyers in Singapore. It is aimed at regulating property demand, particularly among investors, foreign buyers, and Singaporeans purchasing multiple properties. The ABSD rates vary depending on the buyer’s residency status and the number of properties owned.
Mechanism:
ABSD applies to residential property purchases based on the buyer’s profile:
For example, a Singapore Permanent Resident buying a second property worth $2,000,000 would pay an ABSD of 30%, amounting to $600,000, in addition to the Buyer’s Stamp Duty (BSD).
Importance:
- Market Regulation: ABSD helps control speculative property purchases and ensures housing affordability for Singaporeans.
- Government Revenue: The tax generates significant revenue that supports national development.
- Property Investment Strategy: Investors must factor in ABSD when making purchasing decisions, as it significantly impacts the overall cost.
Strategies for Managing ABSD:
- Joint Ownership with Family: Spouses can structure property purchases to minimize ABSD if one partner is a first-time buyer.
- Decoupling Ownership: One spouse transfers ownership of an existing property to the other to qualify as a first-time buyer when purchasing another property.
- Buying Under a Trust: Some investors purchase properties under a trust to avoid ABSD, though this requires legal and financial considerations.
- Commercial Property Investment: ABSD applies only to residential properties, so some investors shift their focus to commercial real estate.
Considerations:
- Payment Timeline: ABSD must be paid within 14 days of signing the purchase agreement if executed in Singapore or within 30 days if signed overseas.
- Changing Policies: ABSD rates are subject to government revisions, so buyers should stay updated on regulatory changes.
- Legal and Financial Planning: Buyers should seek professional advice before structuring purchases to minimize ABSD liability.