You and your spouse likely want to buy another property in Singapore. Still, you don’t want to pay the high Additional Buyer’s Stamp Duty (ABSD) levied on owning two Singapore properties. You perform a Google search to learn more about Decoupling Property Singapore and to find out if there are any workarounds.
Since it enabled couples to buy “ABSD-free” investment properties, property decoupling was long regarded as the “holy grail” option in Singapore. However, the Inland Revenue Authority of Singapore (IRAS) stated that split 99-to-1 homeownership agreements would be looked into.
Couples may find themselves responsible for a bill of unpaid stamp duty and a 50% fee on the excess duty that is owing if it is determined that this arrangement is artificial or fabricated. That’s the last thing you want to deal with, anyway.
When Singapore Citizens seek to buy a second or subsequent residential property, they must pay the ABSD. To avoid this, a Singapore Citizen would need to ensure that no other residential properties were registered in their name at the time of the purchase.
Co-owners can avoid this problem and avoid complications by disconnecting their original property and giving their part to the other co-owner. As a result, one person becomes the sole owner of the current home, allowing the other to purchase another home without being subject to the ABSD’s rules.
You might be asking, though, why the trouble of Decoupling Property Singapore would be required. Why don’t you buy the property immediately under one of the couple’s names? However, there is a good reason for this, and it has to do with funding.
Banks need to ensure that the amount they lend a buyer does not exceed the Total Debt Servicing Ratio (TDSR). A borrower’s total monthly loan installments at the start of each month cannot exceed 55% of their gross monthly income under TDSR.
When a couple acquires a home, the TDSR is calculated using their combined gross monthly income, allowing them to borrow more money than they would if they were buying individually. Simply put, this 99-to-1 agreement allows couples to borrow more money from banks when they first purchase real estate and then purchase ABSD-free investment properties.
Is It Illegal to Decoupling Property in Singapore? Contrariwise, tax fraud is not. The critical thing to keep in mind is that tax avoidance is illegal. The “savings” you may be hoping to find are not as serious as the legal consequences of deliberately reducing or avoiding your tax liability or collecting tax refunds through illegal tactics.