Decoupling | A Way To Minimize Or Avoid ABSD When Purchasing A Second Home

Apr 19

Buying a second property in Singapore can be an attractive way to increase your real estate portfolio, but it does come with some challenges. Purchasing a second property comes with higher taxes and additional costs, such as the Additional Buyer Stamp Duty (ABSD). These extra costs can make it harder to afford the purchase of the new property.

And if you have ever consider buying a second property, you may have come across the term “Decoupling.” So what exactly is Decoupling and how can it help you in purchasing a second home?

What Is Decoupling?

In short, Decoupling is when two individuals who are married or in a civil partnership separate their ownership status from the first property, so that the other individual is able to purchase a 2nd property without incurring or minimizing ABSD that would otherwise be payable if they purchased the property jointly. In other words, Decoupling can help to reduce payable tax and make it easier for them to own a second property.

The process of Decoupling involves changing the registered owners of both properties from joint ownership to individual ownership. This requires formal paperwork and legal documents to be drawn up and submitted to the relevant government body or agencies. It’s important to note that there may also be specific foreign buyer restrictions associated with purchasing second properties which must also be taken into account when planning your purchase.

Decoupling is becoming increasingly popular among couples as they look for ways to invest in property without paying extra tax like ABSD, as it gives homeowners more flexibility over how they split the taxation liabilities between themselves, giving them more control over how much each of them will pay out-of-pocket for the purchase of an additional property.

Decoupling Of HDB Flats

It is important to be aware that Decoupling of HDB flats can be a complicated process. As many homeowners began taking advantage of the HDB ownership transfer rule, in 2016 HDB tightened the ownership transfer rule to only allow the transfer of ownership under 6 special cases. They are:

Marriage
Divorce
Death Of An Owner
Financial Complications
Renunciation Of Citizenship
Medical Reasons

What Options Do Home Owners Have When It Comes To Decoupling Property?

When it comes to Decoupling, there are two ways to do it. You can either transfer your share of the property as a gift, or sell parts of your share to the other owner.

Transfer Your Ownership As A Gift

You can also Decouple your property by selling your share to the other individual. This is usually done through a private sale transaction between the two parties. You will need to draw up and sign a Sales & Purchase Agreement (SPA) and submit it to the relevant government body or agencies. When selling your share of the property, there will be tax implications so it is important to consider this before deciding to go ahead with it. Additionally, you may need to get a lawyer involved if both parties are in agreement and agree on the terms of the sale.

Sell Your Share Of Property

Takeaway

Overall, Decoupling can help couples buy a second property by avoiding or minimizing ABSD tax – making it easier for them to reach their financial goals with regards to their real estate investment portfolio or future plans for retirement. It’s worth taking the time to speak with experienced real estate agents or financial advisors for Decoupling advice or buying multiple properties so that you can fully understand all potential outcomes and implications before proceeding further with your decision-making process.

Find Us Here!

Decoupling%20Singapore