Singapore is often regarded as one of the most lucrative property markets in the world. With its safe, stable, and robust economic environment, it is no wonder why both local and foreign investors are eager to invest in real estate here. However, one major consideration is the Additional Buyer’s Stamp Duty (ABSD), a tax imposed to cool off the housing market. This article will guide you on how to avoid ABSD and provide you with insights on how to buy a second property in Singapore without ABSD.
Understanding ABSD in Singapore
The ABSD is a supplementary tax introduced to manage the influx of property purchases and ensure a more sustainable property market. While the intention is noble, it can create a financial burden for those eyeing multiple real estate investments.
Strategies to Avoid ABSD
- Decoupling Property Ownership: This involves transferring the ownership of an existing property to one spouse, freeing up the other to purchase a new property without incurring ABSD.
- Buying Under a Child’s Name: If investing for the long term, purchasing property in the name of an adult child who does not yet own any property can bypass the ABSD.
- Setting Up a Trust: Placing the property under a trust for beneficiaries who do not own any property can be another viable option to avoid ABSD.
Buying a Second Property in Singapore Without ABSD
- Use the CPF Housing Grants: When purchasing HDB flats, there are specific CPF housing grants that can ease the financial burden. Utilizing these grants can help keep your investments within a reasonable budget.
- Look for Exemptions: Some properties, such as those built under the Executive Condominium Scheme, are exempted from ABSD for the first purchase and subsequent acquisitions within certain criteria.
- Consider Commercial Properties: ABSD does not apply to commercial real estate investments. This provides a great opportunity for diversification without the tax constraints.
FAQs About Avoiding ABSD in Singapore
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Q: What is ABSD?
A: ABSD stands for Additional Buyer’s Stamp Duty, an extra tax imposed on top of the existing Buyer’s Stamp Duty when purchasing residential properties in Singapore.
Q: Can foreigners avoid ABSD?
A: Generally, foreigners cannot avoid ABSD when buying residential properties in Singapore unless they qualify for specified exemptions or set up a legitimate business entity for property investment.
Q: Are there any legal risks in decoupling property ownership?
A: It’s crucial to engage a legal advisor to understand the full implications and ensure all transactions are compliant with Singapore’s property laws to mitigate any potential risks.
Investing in Singapore’s real estate market can be highly rewarding, especially when navigating through the complexities of avoiding ABSD in Singapore. With strategic planning and expert guidance, it’s possible to accumulate assets without incurring extra taxes. Always explore your options and stay informed to make the most of your property investments.
