Feb 06, 2013 - By: iProperty.com Singapore
With the seventh round of property cooling measures rolled out a fortnight ago, it has caused some to shy away from property investment for the time being. However, those who are adamant in buying have now come up with a way to effectively reduce the stamp duty they have to pay – decoupling.
Decoupling works in the way where a husband and wife, or a parent and child, who bought a house together transfers one partner's share to the other person. This creates a sole owner and grants the other half of the pair the liberty to purchase another property without having to pay the additional buyer's stamp duty (ABSD) since that purchase will be seen as his first.
The saving is of a substantial amount. According to the government regulation, a Singaporean buying a second home will have to pay 7 per cent ABSD, while permanent residents (PRs) pay 10 per cent.
According to recent market reports, law firms in Singapore have seen an increasing number of cases where couples “decouple” their properties. Couples are no longer interested to share co-ownership or part ownership of their property assets given the present situation. Rather, they would prefer transferring everything to one party so that the other can buy without the burden of ABSD, thereby owning more properties but paying lesser stamp duty.
This approach can be seen as taking pre-emptive measures to safeguard the interest of property owners and buyers as they are hardly convinced by the government that these cooling measures are temporary. It is not a known fact when they are going to be lifted, nor is it certain that there will not be harsher measures.
Some has touted the new stamp duty laws as the most radical since 1973. That year witnessed the introduction of the Residential Property Act which prevented foreigners from purchasing landed homes.
Right now, the ABSD is of a similar context in which foreigners are taxed higher than locals when they purchase properties in Singapore. Many people on the ground seem to regard this as the government’s message in driving across that the interests of Singaporeans are placed as top priority.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)