You may want to purchase a second house in Singapore with your spouse, but you don’t want to pay the substantial Additional Buyer’s Stamp Duty (ABSD) tax that comes with having two properties. You run a Google search to find out more about Decoupling Property Singapore and whether there are any workarounds.
Since it enabled couples to purchase “ABSD-free” investment properties, Property Decoupling was once seen as the “holy grail” in Singapore. However, the Inland Revenue Authority of Singapore (IRAS) stated that split 99-to-1 homeownership agreements would be looked into.
The two may find themselves liable for an unpaid stamp duty bill, as well as a 50% fee on the excess duty owed, if it is discovered that this arrangement is artificial or fraudulent. You don’t want to deal with that anyway.
When Singapore Citizens seek to buy a second or subsequent residential property, they must pay the ABSD. To prevent this, a Singapore citizen would need to ensure that no other residential properties were registered in their name at the time of purchase.
Co-owners can avoid this problem and others by splitting up their original property and giving each other a part. A single individual, therefore, owns the property and is exempt from the ABSD rules governing the purchase of new homes.
However, why would it be essential to go through the trouble of decoupling the property in Singapore? Why don’t you buy the property in one of the couple’s names right away? However, there is a good reason for this, and it has to do with funding.
Banks need to ensure that the amount they lend a buyer does not exceed the Total Debt Servicing Ratio (TDSR). A borrower’s total monthly loan obligations at the start of each month cannot exceed 55% of their gross monthly income under TDSR.
The TDSR is calculated using the buying spouse’s combined gross term income, which allows them to borrow more than they could if they were purchasing the house individually. To put it another way, this 99-to-1 agreement allows couples to buy their first real estate property and subsequent ABSD-Free investment properties with further bank loans.
Is It Illegal to Decoupling Property in Singapore? But it’s not tax fraud. Remember that it is illegal to evade taxes. The legal repercussions far outweigh whatever “savings” you might be hoping to find if you purposefully lower or avoid your tax liability or receive tax refunds through illegal methods.
