Most likely, you and your spouse intend to purchase a second property in Singapore. Still, you are unwilling to pay the substantial Additional Buyer’s Stamp Duty (ABSD) tax that accompanies owning two properties in the country. You run a Google search to find out more about Decoupling Property Singapore and whether there are any workarounds.
Because it enabled couples to purchase “ABSD-free” investment properties, Property Decoupling was long regarded as the “holy grail” option 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 avoid this, a Singaporean would need to ensure that at the time of purchase, no additional residential properties were registered in their name.
Co-owners can avoid this problem and others by splitting up their original property and giving the other co-owner their portion. This makes one individual the only owner of the property and exempts them from the ABSD’s rules on 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 immediately buy the property under one of the couple’s names? 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.
Because the TDSR is calculated using the couple’s combined gross income, they can borrow more than they could if they were buying the home individually. In other words, when couples buy their first real estate property and future ABSD-free investment properties, this 99-to-1 agreement allows them to get additional bank loans.
Is It Illegal to Decoupling Property in Singapore? But it’s not tax fraud. Remember that it is illegal to evade taxes. More serious than any “savings” you might be hoping to find are the legal repercussions of intentionally reducing or avoiding your tax liability or getting tax refunds through illegal tactics.