Most homebuyers are familiar with Buyer’s Stamp Duty (BSD) as it applies to all property transactions. However, one less common form of stamp duty when purchasing residential properties is the Additional Buyer’s Stamp Duty (ABSD). While everyone has to pay BSD, not all buyers have to pay ABSD.
Stamp duties were first introduced in Singapore to regulate property prices. In a similar vein, ABSD was later instituted to manage the demand for residential properties to ensure that residential property remains affordable for Singaporeans. The main difference between BSD and ABSD lies in how they are calculated. The amount of payable BSD tax is dependent on the value of the property, regardless of the profile of the buyer.
Do I Have to Pay Additional Buyer’s Stamp Duty (ABSD)?
How much ABSD one has to pay depends on the profile of the buyer as at the date of purchase or acquisition of the residential property. The following factors would determine one’s ABSD liability:
Whether the Buyer is an Individual or an Entity
Different ABSD rates apply for individuals and entities. An entity refers to a person who is not an individual and includes
- An unincorporated association
- A trustee for a collective investment scheme when acting in that capacity
- A trustee-manager for a business trust when acting in that capacity
- The partners of the partnership whether or not any of them is an individual, where the property conveyed, transferred or assigned is to be held as partnership property
In the event a property is jointly purchased by buyers of different profiles, ABSD of the entire purchase value will be calculated according to the profile with the highest ABSD rates.
The Profile of the Buyer
ABSD will be calculated according to the applicable rate based on the profile of the buyer on the date of purchase. Different ABSD rates apply to buyers of different residency status —Singapore Citizen (SC), Permanent Residents (PR), and Foreigners.
The Count of Residential Properties Owned by the Buyer
On top of residency status, the number of properties owned by the buyer also determines which ABSD rates are applicable. Whether a property is counted depends on the following:
- A property will be counted upon the date of signing of the Contract or Agreement to purchase the property as the buyer already has an equitable interest in the property, regardless of whether the property has been legally transferred to him.
- A full count of the property will be considered for partial and joint ownership.
- For properties held on trust, the property will be included as the count for the identifiable beneficial owner.
- For multiple properties purchased in one transaction under a single contract, each property will be counted as a separate property. If a SC who does not own any property at the time of purchase decides to acquire two residential properties in one contract, he may choose either unit to be subject to ABSD. In the event multiple properties are jointly purchased by buyers of different profiles, each property is counted as a separate property and the highest ABSD rate will apply on each property.
- Properties acquired by means other than purchase, such as inheritance or settlement, are included in the count.
- HDB shops with attached living quarters or shophouses with a permitted residential area will be counted.
- All residential properties gazetted for compulsory acquisition are excluded.
- All residential properties geographically located outside of Singapore are excluded.
Whether the Residential Property is to be Held in a Living Trust
In May 2022, the government announced that any transfer of residential property into a living trust would be subject to an ABSD rate of 35%. This is known as ABSD (Trust) and refers to any trust created by a person during his or her lifetime, with effect from 9 May 2022.
How Is Additional Buyer’s Stamp Duty Calculated?
As of December 2022, the ABSD rates for the different buyer profiles are as follow:
Alternatively, you can use this IRAS Stamp Duty Calculator to calculate how much ABSD you have to pay.
In the event you are liable to pay ABSD, similar to BSD, you can make payment through IRAS’ myTax Portal. Do take note of the penalties for late payment.
ABSD Exemptions and Remissions
There are some exemptions and remissions for ABSD. For instance, for SCs, if you have contracted to sell your sole private property before you accept the Option to Purchase (OTP) for another private property, you will be exempt from paying ABSD.
Foreigners or PRs married to Singaporeans who don’t own any residential properties are also not liable to pay ABSD. Under Free Trade Agreements, citizens and permanent residents of Iceland, Liechtenstein, Norway, Switzerland and the United States of America will be exempt from paying ABSD on their first property purchase.
Overall, Additional Buyer’s Stamp Duty is an important tool for the government to maintain the affordability of residential property for Singaporeans. For the average Singaporean homebuyer who is only in the property market to look for a place of residence, ABSD would not be anything to worry about as this tax will only be levied from their 2nd property purchase and beyond.
However, for SCs who own more than 1 property, PRs, foreigners and entities, it is crucial to understand which ABSD rate applies to you to ensure you can finance your purchase. Property buyers in the market for new residential properties have to keep updated on changes regarding ABSD, as the Singaporean government introduces more cooling measures with increasing frequency to curb rising property prices.