REVISIONS TO ABSD RATES AND HOW THIS AFFECTS YOUR PROPERTY PURCHASE
Prompted by the steep surge in property prices over the past year, new cooling measures were introduced in order to suppress speculation in the property market and to prevent future purchasers from overstretching their finances should the purportedly overheating property market be left unmonitored. One such measure implemented is to increase the Additional Buyer’s Stamp Duty (“ABSD”) rates on residential property purchases.
ABSD is an additional stamp duty on top of the existing mandatory buyer’s stamp duty that may be imposed on certain individuals or entities who purchase residential properties. The table below compares the old and new ABSD rates:
In a nutshell, Singapore Citizens (“SC”) or Singapore Permanent Residents (“SPR”) purchasing their second or subsequent residential property and foreigners purchasing any residential property in Singapore would be subject to a 5% increase of ABSD as compared to the previous rates. Fortunately, the ABSD adjustment will not affect SC or SPR purchasing their first residential property as these rates will remain at 0% and 5% respectively. The highest ABSD rate will be applied for parties of different profiles who jointly purchase a residential property.
Notwithstanding the implementation of the new rates, married couples with at least one SC spouse who are purchasing their first residential property would still be able to apply for a full remission of their ABSD. If they are purchasing their second residential property, they may only get a refund of their ABSD if they sell their first property within 6 months after the date of purchase of the second property, or the date of the Temporary Occupation Permit or Certificate of Statutory Completion of the second residential property, whichever is earlier.
These new adjusted rates will be implemented from 6 July 2018. However, buyers should be aware that there is a transitional provision for transactions where the Option to Purchase was granted before 5 July 2018, and which was not varied on 6 July 2018 or thereafter. If this Option to Purchase was exercised on or before 26 July 2018 or within the Option to Purchase validity period (whichever is earlier) then the buyers may apply the old ABSD rates to their purchase.
In short, individuals or couples seeking to buy residential properties should make the necessary financial preparations in the event that their purchase is affected by ABSD. Love it or hate it, it’s here to stay.
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