Property investment in Singapore can be a lucrative venture, but it often comes with its own set of challenges. One of these is the Additional Buyers’ Stamp Duty (ABSD). This duty can significantly increase the cost of acquiring a second property. Therefore, knowing how to avoid ABSD is essential for savvy investors.
Understanding ABSD in Singapore
ABSD is a tax levied on top of the prevailing Buyer’s Stamp Duty (BSD) when purchasing residential properties. It was introduced to cool the property market and curb speculative investments. This makes it crucial to plan carefully to minimize or avoid ABSD Singapore.
Legal Methods to Avoid ABSD When Buying a Second Property in Singapore
There are several legal strategies one can adopt to minimize or altogether avoid ABSD:
- Decoupling: This involves transferring ownership of a property to one spouse, allowing the other to purchase a new property without being subject to ABSD.
- Buying Under a Child’s Name: Purchasing property under a child’s name can be a viable strategy, especially if the child has not yet purchased a property.
- Purchase Commercial Property: Since ABSD applies only to residential properties, investing in commercial real estate can help sidestep the tax.
- Foreign Trusts: Setting up a foreign trust to purchase property may offer a way to avoid ABSD, although this is a complex path requiring legal consultation.
Step-by-Step: How to Buy a Second Property in Singapore Without ABSD
Here’s a step-by-step outline on how you could consider purchasing a second property while minimizing ABSD impact:
- Understand Your Current Situation: Evaluate your current property holdings and the potential ABSD applicable.
- Explore Decoupling: Consult a legal expert to navigate the decoupling process effectively.
- Check Eligibility Under Different Names: Review the possibility of purchasing property using a family member’s or child’s name.
- Invest in Commercial Property: Look into commercial real estate options as these are not subject to ABSD.
- Seek Professional Advice: Always consult financial advisors and property experts to ensure compliance with legal frameworks.
FAQs on Avoiding ABSD in Singapore
- What is ABSD?
ABSD stands for Additional Buyers’ Stamp Duty, a tax levied on the purchase of second or subsequent residential properties in Singapore.
- Can foreigners avoid ABSD?
Generally, foreigners are subject to a higher ABSD rate. However, setting up legal entities or trusts could provide alternatives, although this requires careful legal planning.
- Is decoupling controversial?
Decoupling is a legal method, but it can have significant financial and legal implications. Professional advice is crucial.
- Does ABSD apply to commercial properties?
No, ABSD only applies to residential properties.
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Planning and informed decision-making are essential when looking to avoid ABSD Singapore. Employing strategies such as decoupling, buying under a child’s name, or investing in commercial properties can provide viable paths to sidestepping ABSD. Always consider seeking professional advice to ensure compliance with Singapore’s regulatory frameworks.
