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.
Related Insights:
Understanding ABSD Rates & Their Impact in Detail
Additional Buyer’s Stamp Duty (ABSD) rates vary based on your residency status and the number of properties you own. Whether you’re a first-time buyer or an investor, knowing the latest ABSD rates can help you make informed decisions and avoid unexpected costs.
Read more: ABSD Rates: What You Need to Know
How ABSD Impacts Your Search for Undervalued Condos
If you’re looking for an undervalued condo, it’s crucial to factor in Additional Buyer’s Stamp Duty (ABSD), especially if you’re a foreigner or buying a second property. Even if the condo is priced below market value, ABSD still applies based on the purchase price or valuation, whichever is higher. Before jumping on a deal, consider whether the overall savings outweigh the additional tax burden.
Looking for strategies to find undervalued condos? Read our guide:
Tips for Finding Undervalued Condos in Singapore
Additional Buyer’s Stamp Duty (ABSD) Glossary Page
Foreigners looking to buy property in Singapore must pay a significantly higher Additional Buyer’s Stamp Duty (ABSD) compared to locals and PRs. This added cost can greatly impact investment decisions. Before making a purchase, it’s important to understand the full financial implications of buying property as a foreigner.
Read more: Real Estate for Foreigners: Rules & Taxes Explained
