Understanding Additional Buyer's Stamp Duty (ABSD)
Published on 11/06/2024
Additional Buyer's Stamp Duty (ABSD) is a tax imposed on certain property buyers in Singapore. Introduced as a cooling measure to manage the local property market, ABSD is applied on top of the standard Buyer's Stamp Duty (BSD) and is influenced by the residency status and the number of properties owned by the buyer.
Key Objectives of ABSD
The primary objectives of ABSD are to:
1. Stabilise property prices by managing demand.
2. Ensure housing affordability for Singaporeans.
3. Discourage speculative investments, especially from foreign buyers.
ABSD Rates and Criteria
ABSD rates differ based on the residency status of the buyer, the entity involved, and the number of properties owned. Below is a summarised table of ABSD rates (as of the latest update):
Source: IRAS
Sample Calculations
To better understand how ABSD is calculated, consider the following scenarios:
1. Singapore Citizen buying a second property worth $1,000,000:
ABSD = 17% of $1,000,000 = $170,000.
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2. Foreign Buyer purchasing a property worth $2,000,000:
ABSD = 60% of $2,000,000 = $1,200,000.
Exemptions and Remissions
Certain exemptions and remissions are available, depending on the buyer's circumstances. These include:
• Marriage Exemption: Married couples, where at least one party is a Singapore Citizen, can apply for ABSD remission when purchasing their first residential property jointly.
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Here are example scenarios where ABSD Remission applies for Sale & Purchase cases.
Impact of ABSD on the Property Market
ABSD has significantly impacted Singapore’s property market by:
• Reducing speculative activities.
• Promoting a more stable price growth trajectory.
• Increasing the cost burden for foreign investors and entities, thereby prioritizing local demand.
Key Considerations for Buyers
Buyers should consider the following before purchasing a property:
1. Assess eligibility for any ABSD exemptions or remissions.
2. Understand the financial implications of ABSD on their purchase.
3. Seek professional advice to navigate complex scenarios, particularly for entities and foreigners.
Overview
ABSD is an essential component of Singapore’s property market regulation framework. By curbing excessive demand and promoting housing affordability, it ensures a balanced and sustainable real estate environment. Prospective buyers are encouraged to stay informed about current ABSD rates and criteria to make prudent property decisions.
Are you liable to pay ABSD for your next purchase? Contact us to find out more!