Ultimate ABSD Singapore Guide [2024]

ABSD Singapore

Welcome to the Ultimate ABSD Singapore Guide, a comprehensive resource designed to help you navigate the intricacies of buying any residential property in Singapore. As you may know, an integral part of this process is understanding the Additional Buyer Stamp Duty (ABSD) – a measure implemented by the Singaporean government to promote a sustainable property market.

The best current additional buyer’s stamp duty rates in Singapore for Singapore Citizens (SC) is 12%, for Singapore Permanent Residents (SPR) is 5%, and for Foreigners and Entities is 20%.

Whether you’re considering a subsequent residential property or are a housing developer looking to expand your portfolio, being cognizant of the ABSD is key. This guide will shed light on how ABSD affects different types of residential properties acquired, offering you valuable insights to make informed decisions. So, let’s delve into the world of ABSD in Singapore!

What Is Additional Buyer’s Stamp Duty?

The ABSD in Singapore is a tax imposed on certain categories of property buyers. It was introduced by the Singapore government as a cooling measure to regulate the residential property market. The ABSD applies on top of the existing Buyer’s Stamp Duty and is payable by the buyer upon the purchase or acquisition of a residential property.

The rates vary depending on the buyer’s residency status and the number of properties owned. It’s crucial for potential property buyers to understand the implications of the ABSD as it can significantly impact the cost of property investment in Singapore.

Key Considerations

• Residency Status: The ABSD rate in Singapore is determined by the buyer’s residency status – Singapore Citizens, Singapore Permanent Residents, or Foreigners.
• Number of Properties Owned: The number of residential properties a buyer already owns also affects the ABSD rate. Even if the property is located outside Singapore, it is still considered in the count.
• Property Type: The type of property (residential/non-residential) also has implications on the ABSD rate.
• Joint Buyers: For joint buyers, the highest applicable ABSD rate would apply. For instance, if a Singapore Citizen and a Foreigner jointly purchase a property, the Foreigner’s higher ABSD rate will apply.
• ABSD Remission: Certain situations may allow for ABSD remission or refund, such as when a married couple purchases a home. It’s important to check your eligibility for any remission or refund.
• Timeline for Payment: The ABSD must be paid within 14 days after the date of the contract or agreement (or, if the contract or agreement is subject to conditions, 14 days after the date when all the conditions are met).

Current Additional Buyer’s Stamp Duty Rates in Singapore

The ABSD rates in Singapore differ based on the buyer’s residency status and the number of residential properties owned. Here’s a breakdown:

• Singapore Citizens (SC): SCs don’t have to pay any ABSD for the first property. However, a 12% ABSD applies for the second property, increasing to 15% for the third and subsequent properties.
• Singapore Permanent Residents (SPR): SPRs are required to pay a 5% ABSD for their first residential property and 15% for the second and subsequent properties.
• Foreigners and Entities: Foreigners and entities, including companies, are required to pay a 20% ABSD on all residential properties.

Note: These rates are subject to change, as they are periodically reviewed by the government based on market conditions. Therefore, it’s essential to stay updated with the latest policy changes before making your property investment decisions.

How Is ABSD Calculated?

The calculation of ABSD in Singapore is relatively straightforward. It is charged on the assessed value of the property or the purchase price, whichever is higher. The assessed value is typically determined by the Inland Revenue Authority of Singapore (IRAS).

Here’s a simple way to understand the calculation:

1. Determine the applicable ABSD rate: The rate depends on the buyer’s residency status and the number of residential properties owned. Refer to the ‘Current Additional Buyer’s Stamp Duty Rates in Singapore’ section above for specifics.
2. Identify the property value: This is the higher of the agreed upon purchase price or the property’s assessed value.
3. Calculate the duty: Apply the ABSD rate to the property value. For instance, if a Singapore Permanent Resident is buying a second residential property for SGD1,000,000, the ABSD would be 15% of SGD1,000,000, which is SGD150,000.

Always remember, the ABSD is in addition to the normal Buyer’s Stamp Duty and must be paid within 14 days of signing the purchase agreement. It’s important to factor this in when planning your property investment budget. It’s advisable to consult with a property tax professional if you have any doubts about your ABSD obligations.

How Does Additional Buyer’s Stamp Duty Work?

The process of ABSD implementation unfolds in a systematic manner. When a potential buyer decides to purchase residential properties in Singapore, the ABSD comes into play. The key factors determining the ABSD rate include the buyer’s residency status (Singapore Citizen, Singapore Permanent Resident, or Foreigner), and the number of residential properties the buyer already owns.

Once the property has been purchased, the buyer is obliged to keep up with ABSD payment. This tax is calculated based on the higher price between the actual purchase price of the property and its market value, as assessed by the Inland Revenue Authority of Singapore (IRAS). The buyer is required to pay the ABSD within 14 days of signing the purchase agreement.

It’s worth noting that ABSD is a measure to regulate the residential property market, designed to discourage individuals from owning multiple properties, thereby ensuring fair access to real estate for all residents. It serves as a form of financial deterrent, with rates escalating for subsequent property purchases, thus encouraging prudence in property investments.

If you are considering buying property in Singapore, it is highly recommended to understand how ABSD works, as it can significantly affect your overall property investment budget. For complex situations or if you’re uncertain about how the ABSD applies to you, consulting a property tax professional would be beneficial. Remember, staying informed about such fiscal obligations can greatly facilitate your property buying process in Singapore.

Why Was Additional Buyer’s Stamp Duty Introduced?

The ABSD was introduced by the Singaporean government as a key measure to moderate the residential property market. The demand for property had been fuelled by low-interest rates and excessive liquidity globally, leading to a sharp rise in property prices in Singapore. The introduction of ABSD aimed at cooling the overheated market and ensuring sustainable growth in property prices.

Moreover, the ABSD was also introduced to foster social equity. By imposing higher tax rates on subsequent property purchases, the policy discourages property speculation and hoarding, thus promoting home ownership among first-time buyers. The differential tax rates based on residency status also ensure that Singapore Citizens, who have a significant stake in the country’s prosperity and stability, are given priority over foreign buyers and entities in acquiring residential properties.

Therefore, the primary goal of ABSD is to maintain a stable and sustainable property market where prices grow in line with economic fundamentals. It also aims to ensure that residential properties in Singapore remain accessible and affordable to Singapore Citizens.

Definition of ‘Residential Property’ for Additional Buyer’s Stamp Duty

The term ‘Residential Property’ in the context of ABSD in Singapore refers to any property that is zoned residential, is permitted to be used for residential purposes, or is actually used as a residence. This broad definition encompasses a variety of property types such as:

• HDB flats, which are public housing units managed by the Housing and Development Board.
• Private properties including condominiums, apartments, and landed properties like bungalows, terrace houses, and semi-detached houses.
• Mixed-use properties, where the residential component is subject to ABSD.

It’s important to note that ABSD applies regardless of whether the residential property is situated locally or overseas, and it extends to properties owned directly or indirectly by an individual or an entity. Therefore, before making a property purchase, it’s crucial to understand whether the property falls under the definition of ‘Residential Property’ for ABSD purposes to anticipate potential tax obligations.

Definition of ‘Entity’ for Additional Buyer’s Stamp Duty

In the context of ABSD in Singapore, an ‘Entity’ is typically defined as a corporate or unincorporated body. Entities can include companies, associations, or bodies of persons, including foreign ones, and trustees.

For example, if a company, regardless of whether it’s local or foreign, buys a residential property in Singapore, it’s considered an Entity. Trusts, where the trustee holds the property on behalf of beneficiaries, are also deemed as Entities. It’s crucial to note that ABSD applies to Entities at the highest rate, regardless of the number of residential properties owned.

For this reason, Entities must consider the substantial financial implications of ABSD when planning their property investment strategies in Singapore.

Are There Any Additional Buyer’s Stamp Duty Exemptions?

Yes, there are certain circumstances where exemptions from Additional Buyer’s Stamp Duty (ABSD) might apply. These exemptions, however, are not universal and are subject to specific conditions:

1. Married Couples: An exemption might be given to a married couple consisting of a Singapore Citizen and a foreigner or Permanent Resident. They are treated as first-time buyers and are not required to pay ABSD for their first residential property.
2. Certain Nationals: Nationals or Permanent Residents from countries with whom Singapore has signed Free Trade Agreements may be eligible for exemption. They are treated the same as Singapore Citizens, and no ABSD is charged for their first property purchase.
3. Property Developers: Property developers might be exempted from ABSD for land purchase if they meet specific criteria, such as completing and selling all units within five years from the date of land acquisition.
4. Building Under Construction: Purchases of building under construction might be exempted under certain circumstances.

Do remember that these exemptions are subject to terms and conditions and are not automatic. It’s advisable to consult a tax professional or a lawyer to better understand these exemptions and how they may apply to your circumstances. By being aware of these exemptions, you can make a more informed decision about your property investment in Singapore.

Additional Buyer’s Stamp Duty Remission for Foreigners Married to Singaporeans

The Singaporean government, in its commitment to promoting family cohesion, provides a remission for Additional Buyer’s Stamp Duty (ABSD) for foreigners who are married to Singaporean citizens. The aim of this remission is to level the playing field for such couples, enabling them to purchase their matrimonial home at the same stamp duty rates as a Singaporean couple.

However, to be eligible for this remission, there are certain criteria that need to be met. These include:

• The couple must be legally married and have at least one Singaporean spouse.
• The property purchased must be the only one owned by either spouse, and it must be used as their matrimonial home.
• Neither spouse should have owned any residential property (either locally or overseas) before the purchase of the current property.
• The couple must also not have received any previous ABSD remission as a married couple.

It’s important to take note that if any of the conditions are not complied with after the remission is granted, the remission may be revoked and the full ABSD may become payable. Therefore, it’s highly recommended to familiarize yourself with these requirements, or seek professional advice, before proceeding with property purchase under this scheme.

Paying Additional Buyer’s Stamp Duty in Singapore

When purchasing residential property in Singapore, Additional Buyer’s Stamp Duty (ABSD) is typically paid on top of the existing Buyer’s Stamp Duty (BSD). The amount of ABSD to be paid is determined by the buyer’s residency status and the number of residential properties they already own.

Singapore Citizens buying their first residential property will not need to pay ABSD. However, if they are purchasing their second property, they will need to pay an ABSD rate of 12%. For any subsequent property purchases, the ABSD rate rises to 15%.

For Singapore Permanent Residents, ABSD is payable even on their first residential property purchase, at a rate of 5%. For their second and subsequent property purchases, the ABSD rate is 15%.

Foreigners, on the other hand, are required to pay ABSD at the highest rate of 20% for all their property purchases in Singapore.

Entities, be they local or foreign, need to pay a flat ABSD rate of 25% on all residential property purchases.

When it comes to payment, the ABSD must be paid in full within 14 days of the date of the Property Sale Agreement, if the agreement is signed in Singapore. If the agreement is signed overseas, the ABSD must be paid within 30 days after receiving the document in Singapore.

Keep in mind that late payment of ABSD may incur a penalty. Therefore, it’s advisable to factor in these potential costs when planning your property purchase in Singapore. As always, if you’re unsure, it’s best to seek the advice of a tax professional or legal expert to help navigate the complexities of ABSD.

Penalties for Late Additional Buyer’s Stamp Duty Payment

Any late payment of Additional Buyer’s Stamp Duty (ABSD) in Singapore is subject to a penalty. This penalty is determined by the Inland Revenue Authority of Singapore (IRAS) and can be quite significant, adding to the financial burden of the property purchase. The penalty fees are calculated based on the unpaid ABSD amount and the length of the delay.

If the ABSD is not paid within the stipulated 14-day or 30-day period (depending on where the agreement was signed), a late payment penalty of 5% is imposed. If the payment remains unpaid after six months, an additional penalty rate of 1% per month can be imposed, up to a maximum of 12%. These penalties can accumulate quickly and lead to a substantial increase in the total cost of the property.

Therefore, it’s vital to ensure that the ABSD is paid promptly and in full to avoid these additional expenses. If you’re uncertain about the payment schedule or the amount due, it’s highly recommended to consult a tax professional or legal expert to provide guidance and avoid any potential penalties.

Avoiding Additional Buyer’s Stamp Duty in Singapore?

While it isn’t typically possible to completely avoid Additional Buyer’s Stamp Duty (ABSD) in Singapore, there are strategies that can be employed to potentially reduce the amount payable. One such strategy is to sell your existing property before purchasing a new one. By doing this, you are able to avoid the ABSD that would be charged on the purchase of a second property.

Another strategy involves joint purchasing. If one of the joint buyers is a Singapore Citizen who does not own any other residential property, the transaction could possibly be exempted from ABSD. However, do keep in mind that these strategies are dependent on your individual circumstances and may not be applicable to everyone.

It’s also important to remember that trying to evade ABSD through illegal means can result in severe penalties. If you’re considering any strategies to reduce your ABSD, it’s advisable to consult with a tax professional or legal expert to understand the potential implications and legality.

ABSD Singapore

The Additional Buyer’s Stamp Duty (ABSD) in Singapore plays a significant role in the residential property market. It’s a crucial consideration for anyone thinking about purchasing property in Singapore, as it can significantly impact the overall cost of the property. Understanding the rate structure for different buyer categories, the penalties for late payment, and the eligibility criteria for any potential remissions is key to making an informed decision.

While there are strategies to potentially reduce the ABSD amount payable, these should be carefully considered with professional advice. It’s always recommended to consult with a tax professional or legal expert when navigating the complexities of ABSD in Singapore. As every individual’s circumstances vary, personalized advice can provide clarity and help avoid any potential pitfalls.

Since you’ve made it to the end, why don’t you check out more of our blog posts down below:

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• Ultimate Guide For Foreigners Buying Property in Singapore (2024)
• Ultimate Guide To Resale HDBs in Singapore (2024)

Frequently Asked Questions

If you have any questions about ABSD Singapore, you can refer to the frequently asked questions (FAQ) below:

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