How does ABSD affect you if you're a Singaporean buying property with a non-Singaporean?

How does ABSD affect you if you're a Singaporean buying property with a non-Singaporean?
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Buying property can be daunting and complicated, especially if it’s your first time. On the finances side, it’s not just the home loan that you need to take note of. There are also other (often hidden) things to take into account, such as the stamp duty and property tax.

For Singaporeans, if it’s their first home, they’re exempted from paying the Additional Buyer’s Stamp Duty (ABSD).

But it’s a different story for those buying with a PR or foreigner. Even if it’s their first residential property, they’re still subjected to the ABSD.

What is ABSD?

The Additional Buyer’s Stamp Duty (ABSD) is a stamp duty paid on top of the Buyer’s Stamp Duty (BSD). The payable rate depends on the residential status of the buyer and the number of properties under their name. How much you’ll need to pay is then computed based on either the property price or valuation, whichever is higher.

It’s a form of cooling measure designed to bring down property prices and make housing more affordable for Singaporeans. So the ABSD rates are higher for non-Singaporeans and those with more than one property. The latest change in the rates was in December 2021, when the ABSD rate for Singaporeans buying their subsequent properties was increased from 12 per cent to 17 per cent for their second residential property.

For PRs buying their second residential property, the increase was even higher from 15 per cent to 25 per cent. And for foreigners buying any property, the ABSD has increased from 20 per cent to 30 per cent.

The thing about the ABSD is that if you’re a Singaporean buying property with a non-Singaporean, you’ll be subjected to a higher ABSD rate.

Here’s a breakdown on how the ABSD can affect your property purchase.

SC/PR buyers

Buying first property

For PRs, whether or not they’re buying their first property on their own or jointly with a Singapore Citizen (SC), they’ll need to pay 5 per cent ABSD.

So if you’re a Singaporean planning to buy a house with a PR, and this is the first property for both of you, you’ll need to pay the 5 per cent ABSD.

Let’s say you’re buying a $1.5 million condo. The ABSD to be paid will be 5 per cent ⨉ $1.5 million = $75,000.

Buying second property

Let’s say both you and another person (a PR) have a residential property on your own, and plan to buy another house together.

As of Dec 16, 2021, the ABSD for SCs buying a second property is 17 per cent. For PRs buying a second property, it’s 25 per cent.

In this case, the payable rate will be higher, which is 25 per cent.

So for a $1.5 million condo, the ABSD payable is 25 per cent ⨉ $1.5 million = $375,000.

SC/Foreigner buyers

Buying first property

Regardless of whether it’s the first property or not, foreigners have to pay a 30 per cent ABSD, as of Dec 16, 2021. This is an increase from 20 per cent.

So as an SC buying the first property with a foreigner, you’ll be subjected to a 30 per cent ABSD.

This means for a $1.5 million condo, the ABSD payable is 30 per cent ⨉ $1.5 million = $450,000.

Buying second property

The ABSD for SCs buying a second property is 17 per cent, while the ABSD for foreigners is 30 per cent regardless of the number of properties they have.

So even if this is your second property, but it’s the first one for the foreigner, you’ll still be subjected to the higher ABSD rate of 30 per cent.

The good news is that if you’re buying as a married couple, you may be eligible for the ABSD remission.

ABSD remission for married couples

With the ABSD remission, you don’t have to pay the ABSD. But you’ll need to meet certain criteria. The main thing is that the property has to be:

  1. Bought jointly by a married couple
  2. Married couple comprises at least one Singaporean

Buying first property

Let’s say you’re a Singaporean and your spouse is a non-Singaporean (either a PR or foreigner). If both you and your spouse don’t have any other residential properties, you can apply for the ABSD remission. So you don’t have to pay the ABSD.

Your lawyer can help with this through the e-Stamping portal.

But the main thing is that the house must be jointly bought by both of you.

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

Buying second property to upgrade

If you and your non-Singaporean spouse are buying a second property together to upgrade (for instance, from an HDB flat to a condo), you’ll be subjected to a higher ABSD rate.

This will be 25 per cent on the second property if your spouse is a PR, or 30 per cent if they’re a foreigner.

You’ll have to pay the ABSD first, even if you plan on selling the first property.

If you manage to sell it within six months from the date of purchase, TOP or CSC (whichever is earlier), you may be eligible for the ABSD remission to get a refund.

Likewise, to be eligible for the remission, the second property must be purchased under both names.

You can apply for the remission through the e-Stamping portal. For more information on the refund application for the ABSD remission, you can also refer to IRAS’ guide.

What else to take note about the ABSD remission?

Not applicable for HDB flats

Take note that this ABSD remission doesn’t apply if you’re upgrading from an HDB flat to another HDB flat, eg. from a 4-room to a 5-room flat.

After all, for public housing, you’ll have to dispose of your old flat within six months of having the new flat.

Not applicable for third property onwards

The ABSD remission is only for buying the first property, or the second property if you sell the existing property.

So if you’re buying a third property together, you’ll have to pay the ABSD and won’t be able to get a refund.

For an SC/PR or SC/Foreigner couple, the ABSD rate will be 30 per cent.

Only for married couples

Even if you’re engaged, you won’t be eligible for the ABSD remission.

The ABSD has to be paid within 14 days of signing the Sale and Purchase Agreement. So if you want to qualify for the ABSD remission, you’ll have to register your marriage beforehand.

This also means that if you’re planning to buy a property with your parents or siblings, you won’t be able to qualify for remission.

Only for married couples with at least one SC

This is one of the first things we mentioned about the ABSD remission earlier, but we thought we should highlight it here again.

The ABSD remission is only applicable for those with at least one Singaporean spouse. So it’s not eligible for PR-foreigner couples.

And given that the ABSD rate to pay will be based on the profile with the higher rate, regardless if this is the first residential property together or the third one together, the ABSD payable will be 30 per cent.

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