As a property owner and/ or prospective property owner, they’re certain legal aspects you ought to be acquainted with, and the Additional Buyer’s Stamp Duty is one of those things. If you are planning to purchase your second property, it is important to be aware of the Additional Buyer’s Stamp Duty (ABSD). This tax was introduced in 2011 as a way to cool down the property market. In this article, we will discuss everything you need to know about ABSD for your second property. We will answer some common questions, such as: What is ABSD? How much do I have to pay? And when do I have to pay for it? So if you’re ready, let’s get started!
What exactly is an Additional Buyer’s Stamp Duty (ABSD)?
The Additional Stamp Buyer’s Duty is a fee( tax) that is levied on buyers of property in Singapore. The amount of tax you have to pay depends on your citizenship status and the type of property you are purchasing. For example, Singapore citizens who are buying their second residential property will have to pay 12% ABSD. However, if you are a Permanent Resident or foreign buyer, you will have to pay 20% ABSD.
Who pays for ABSD?
The ABSD is paid by the buyer of the property. However, if you are taking out a loan to Singapore Citizens: ABSD will only be levied on the second (17%) and subsequent (25%) property purchases.
When talking about the amount of ABSD being levied on a buyer, permanent residents are favoured over foreigners and entities. The percentage levied to each category looks something like this;
- For Foreigners
The standard levy amount of ABSD for foreigners is 30%
- For Permanent Residents
The ABSD is favourable towards permanent residents. PRs pay 5% for their first property, 25% for the second and 30% for any other property that follows.
- For Companies and Associations ( Entities)
For associations or companies, the levied percentage is 40% for any and every property purchased. That is, 35% for ABSD proper and an additional 5% ABSD for developers in the field. This 5% is non-refundable.
How much is ABSD in Singapore?
The amount of ABSD you have to pay depends on your citizenship status and the type of property you are purchasing. For example, Singapore citizens who are buying their second residential property will have to pay 12% ABSD. However, if you are a Permanent Resident or foreign buyer, you will have to pay 20% ABSD. It all depends on your status and the net value of your property.
How Much You Have To Pay To Own Multiple Properties
If you are a Singapore citizen and you already own one property, you will have to pay 12% ABSD on your second property purchase. If you are a Permanent Resident or foreign buyer, you will have to pay 20% ABSD. However, if you are buying an investment property (i.e. a property that is not your primary residence), the ABSD rate is 15% for all buyers regardless of citizenship status.
Is ABSD applicable to Housing and Development Board (HDB)?
Yes, ABSD applies to HDB flats as well. However, there are certain concessionary rates for Singapore citizens who are buying their first HDB flat. For more information on this, you can speak to an HDB officer or visit their website.
The Purpose of ABSD
ABSD was introduced in 2011 as a way to cool down the property market. The tax is levied on buyers of property in Singapore, and the amount of tax you have to pay depends on your citizenship status and the type of property you are purchasing.
How To Avoid The ABSD?
If you are a Singapore citizen and you already own one property, you will have to pay 12% ABSD on your second property purchase. If you are a Permanent Resident or foreign buyer, you will have to pay 20% ABSD. However, if you are buying an investment property (i.e. a property that is not your primary residence), the ABSD rate is 15% for all buyers regardless of citizenship status. So if you want to avoid paying the ABSD, it is best to buy an investment property rather than a second home.
As we earlier mentioned, ABSD was introduced in 2011 as a way to cool down the property market. The tax is levied on buyers of property in Singapore, and the amount of tax you have to pay depends on your citizenship status and the type of property you are purchasing. However, if you are a Permanent Resident or foreign buyer, you will have to pay 20% ABSD. So if you want to avoid paying the ABSD, it is best to buy an investment property rather than a second home.
Another way to avoid paying the ABSD is to purchase a commercial or industrial property instead of a residential one. The ABSD rate for commercial and industrial properties is only 0.25% for all buyers, regardless of citizenship status. So if you are looking to invest in property, this may be a better option for you. Lastly, you can also avoid paying the ABSD by selling your current property before purchasing another one. This is because the ABSD is only applicable to buyers who already own one property. So if you sell your current property and then purchase another one, you will not have to pay the ABSD on your second purchase.
However, do note that you will still have to pay Capital Gains Tax (CGT) on the sale of your property. The CGT is a tax on your profit from selling your property and is calculated based on the difference between the sale price and the purchase price. So if you are looking to avoid paying both the ABSD and CGT, it is best to wait until you have owned your property for at least five years before selling it. This is because you will be exempt from paying CGT if you have owned your property for more than five years.
There are ways to avoid paying the ABSD, such as buying an investment property or commercial/industrial property instead of a residential one or selling your current property before purchasing another one. Do note that you will still have to pay Capital Gains Tax (CGT) on the sale of your property if you are not exempt from it.
Conclusion
In conclusion, permit us to reiterate that the ABSD is a tax that is levied on property owners or prospective buyers in Singapore. The amount of tax you have to pay depends on your status( that is, if you are a permanent resident or not) and the type of property you are purchasing. There are a couple of ways to avoid paying the ABSD, such as buying an investment property or commercial/industrial property instead of a residential one or selling your current property before purchasing another one. Do note that you will still have to pay Capital Gains Tax (CGT) on the sale of your property if you are not exempt from it.
The ABSD is nothing big to be frightful of, but it nevertheless can cost you a few thousand of your finances. Now, we have offered you the necessary tricks on how to avoid having to pay such high rates, especially if you are purchasing a high-value property. It is one thing to avoid the ABSD by buying a different kind of property, and it is another thing entirely is to ignore the tax. You do not want to do the latter. It could get you into a lot of legal trouble. In that light, we hope this article has been of help to you in answering all of your questions and clearing out doubts.