Additional Buyer's Stamp Duty: What is ABSD & how much do I need to pay? (Dec 2021)

When you buy a home, you’re not just paying for that nice new flat or apartment.

There are actually quite a few other things you’ll be spending thousands on, including interest payments for your home loan, legal fees and… stamp duty.

Each time you buy a property, you’re obliged to pay Buyer’s Stamp Duty (BSD) to IRAS.

And, if you happen to satisfy certain conditions, such as, oh, being a foreigner or owning another property, you get slapped with Additional Buyer’s Stamp Duty (ABSD), which was introduced as part of the cooling measures to stop overzealous buyers from overheating the property market.

So how much does this add to the price tag of your property?

*As of Dec 16, 2021, the Singapore government increased the Additional Buyer’s Stamp Duty for Singaporean citizens, Permanent Residents, and foreigners buying properties in Singapore. Read on for the full breakdown.

Buyer’s Stamp Duty (BSD) in Singapore

All property buyers have to pay BSD. There is no escape. Think of it as an unavoidable tax on your home.

BSD rates are calculated based on the value of the property, as follows:

As you can see, the more expensive your property, the higher the overall BSD rate you’ll be forced to pay. So buyers of $17 million properties at Sentosa Cove, take note.

Additional Buyer’s Stamp Duty (ABSD) Singapore

In addition to the BSD, there is also the Additional Buyer’s Stamp Duty (ABSD), which has increased since Dec 16, 2021.

You are liable to pay ABSD on residential property purchases if:

• You’re a Singapore citizen who’s already a residential property owner and wants to buy a second, third, or fourth house
• You’re a PR
• You’re a foreigner

Essentially, it is an addition to the Buyer’s Stamp Duty that is imposed on all purchases of a residential property in Singapore.

Unlike the Buyer’s Stamp Duty, the Additional Buyer’s Stamp Duty, or ABSD, is a kind of tax on the purchase of a residential property in Singapore that only affects Singapore Permanent Residents and foreigners, or Singapore Citizens who are buying more than one property.

In other words, it artificially raises the property prices for everyone except Singapore Citizens buying their first residential property.

Here’s how much you have to pay:

Additional Buyer’s Stamp Duty (Dec 2021)	ABSD rate
Singapore citizen buying your first residential property	0 per cent
Singapore citizen buying a second residential property	17 per cent
Singapore citizen buying a third and subsequent residential property	25 per cent
PR buying a first residential property	5 per cent
PR buying a second and subsequent residential property	25 per cent
PR buying a third and subsequent residential property	30 per cent
Foreigner buying any residential property	30 per cent

As you can see, the ABSD rates make the BSD ones look like peanuts.

And yes, HDB property counts as a first property in the computation of ABSD.

If you’re thinking of upgrading your home, you can lower or eliminate your ABSD liabilities by timing the sale of your home to coincide with your purchase of a new one.

ALSO READ: Why ABSD for developers needs to be tweaked and how it affects you as a home buyer

ABSD remission for married couples

There are some cases where you don’t need to pay ABSD even as a foreigner or PR.

If, as a foreigner or PR, you are married to Singaporean citizen and you don’t own any residential property currently, you don’t have to pay ABSD.

You can also get your ABSD refunded if you are switching homes as a married couple. The first residential property that you paid ABSD for must be sold within six months after the purchase date of the second property, if completed, or after the issue date of the TOP or CSC (whichever is earlier). See full terms and conditions of ABSD remission on IRAS website.

Property cooling measures in Singapore — what are they for?

When the ABSD was first introduced in December 2011, it was mainly to discourage foreigners and entities (essentially any buyer who is not an individual) from purchasing residential property in Singapore, and discourage the purchase of three or more residential properties.

A foreigner who wants to buy a $2 million property today, for example, would now have to pay $600,000 in additional stamp duty.

ABSD rates (Dec 2021)	First property	Second property
ABSD for Singaporean Citizen	0 per cent	17 per cent
ABSD for PRs	5 per cent	25 per cent
ABSD for foreigners	30 per cent	30 per cent

One of the immediate benefits of implementing the ABSD was seeing a sharp drop in property speculation.

Buyers from overseas who may have previously been interested in investing in Singapore property were put off by the high ABSD. The thought of paying over $600,000 for a $2 million property was enough to make even the richest property investors think twice.

However, the ABSD was further increased thrice – in January 2013, July 2018, and Dec 16, 2021.

ALSO READ: Quick takes from property analysts: How will the new cooling measures affect Singapore's property market?

Coupled with the Total Debt Servicing Ratio and Seller’s Stamp Duty, these measures were meant to decrease the volume of property transactions.

While the measures did cool the property market for a few years around 2018 to 2020, the pandemic drove another heatwave in the property market.

Average Singaporeans, especially many of us who are already struggling with the home loan downpayment and monthly repayments, will be quickly forced out of property ownership as prices swell beyond our incomes.

This article was first published in MoneySmart.