Additional buyer stamp duty (“ABSD”) was jointly introduced by the Ministries of Finance and National Development, and the Monetary Authority of Singapore on 26th April 2023 to cool demand for residential property. The new measures exclude Singapore citizen and permanent resident first time buyers and are most significant for foreigners and non-housing developer entities, doubling rates from 30%-60%.
Previous government cooling measures were deemed to be successful, so the latest additional stamp duty specifically targets (a) prioritising Singapore citizens in acquiring owner-occupied homes and (b) pre-emptively dampening local and foreign investor demand for residential properties.
Senior Partner and Head of JTJB’s Property & Conveyancing Department, Mabel Tan, commented: “It is still too early to tell what the implications of the measures in terms of foreign investor behaviour will be, although we expect that the market will correct itself within a few months”.
Revised Rates for ABSD
A range of factors relating to the buyer’s profile at the date of purchase or acquisition of a residential property will now determine the ABSD rate, such as:
- whether the buyer is an individual or an entity;
- whether they are a Singapore citizen, Singapore permanent resident or a foreigner;
- the number of previous residential properties owned; and
- whether the residential property is to be held in a living trust.
The Inland Revenue of Singapore (“IRAS”) set out the new ABSD rates on 27th April 2023, as follows:
| Type of Buyer | Old ABSD Rates (16 December 2021-26 April 2023) | New ABSD Rates (from 27 April 2023) |
| Singapore Citizen buying 1st residential property | 0% | 0% |
| Singapore Citizen buying 2nd residential property | 17% | 20% |
| Singapore Citizen buying 3rd and subsequent residential property | 25% | 30% |
| Singapore Permanent Resident buying 1st residential property | 5% | 5% |
| Singapore Permanent Resident buying 2nd residential property | 25% | 30% |
| Singapore Permanent Resident buying 3rd and subsequent residential property | 30% | 35% |
| Foreigners buying any residential property | 30% | 60% |
| Entities buying any residential property | 35% | 65% |
| Housing Developers buying any residential property | 35% (plus 5% non-remittable extra) | 35% (plus 5% non-remittable extra) |
| Trustees buying any residential property | 35% | 65% |
Tan added: “Worth noting is that Singapore has free trade agreements with the European Free Trade Association and the US, so nationals and permanent residents of Iceland, Liechtenstein, Norway, Switzerland and the US can acquire residential property in Singapore at the same stamp duty rate as Singapore citizens”.
Property Acquisition by Trusts
As can be seen in the table above, the rate of ABSD for trustees acquiring residential properties has increased from 35%-65%. Trust purchasers can seek a refund if the residential property is held on trust for identifiable individual beneficiaries, but this could be a burden on the purchaser who may be borrowing to finance the acquisition.
Tan commented, “it is also not possible to take a loan if the purchaser is buying a property and holds it under a trust – the bank will not be willing to lend”.
Additionally, if property is being passed to a non-identifiable beneficial owner, IRAS will ensure that all transfers of equity interests are subject to Additionally Conveyancing Duty (Trust) (“ACD”).
Counteracting Tax Avoidance Arrangements under the Stamp Duties Act
Although there have been transitional exemptions for buyers that signed options to purchase before the new rates came into force, no further concessions will be made according to IRAS. Further, IRAS has the power to counteract tax avoidance arrangements under the Stamp Duties Act and could impose a 50% surcharge on the additional duty payable.
As some property purchase agreements may have been entered into with the intention of avoiding ABSD, IRAS recently launched an audit of private property purchases involving a “99-to-1” sales contract, whereby first-time buyers sell a partial interest in the property to another buyer eg: a family member, within a short time period. This type of deal allows the buyer, who already owns other properties, to avoid ABSD whilst still becoming the new property’s co-owner, as well as being able to receive bank loans as a co-applicant.
“IRAS recently implied that it would assess tax avoidance cases more favourably if first-time buyers voluntarily disclose any involvement in a “99-to-1” scheme”, Tan said.
For more information, please contact:
 | Mabel TanSenior Partner JTJB Singapore Office |  | Ting Chi YenPartner JTJB Singapore Office |
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 | Joseph TanConsultant JTJB Singapore Office |  | Tio Siaw MinAssociate JTJB Singapore Office |
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