Additional Buyer’s Stamp DutyIRAS Seminar on 17 July 2018

Outline

• Additional Buyer’s Stamp Duty (ABSD) treatment and

Changes to ABSD rates

• Transitional Remission and How to apply

• Illustrations and Computations

• ABSD spouses remission

• Common queries on ABSD

• Online Stamp Duty Calculator

• Question & Answer

1

Additional Buyer’s Stamp Duty (ABSD)

treatment and Changes to ABSD rates

ABSD Treatment

• ABSD applies to documents executed for the acquisition of

residential properties defined as:

a. For building units: one of the permitted uses is residential

b. For vacant land or entire building with land: the zoning is

Residential, Residential with Commercial at First Storey, Commercial &

Residential, Residential/Institutional or White.

• In the case of a mixed-use or mixed-zoning property, ABSD

applies on the residential component.

• The market value of the residential component can be determined

by a professional valuer.3

ABSD Treatment

• The ABSD rates depend on the buyer’s profile

a. For non-foreign individuals: rate depends on residency status

(Singapore Citizen (SC), Singapore Permanent Resident (SPR))

and property count at the time of purchase

b. For foreigners and entities: flat rate

• For acquisitions made jointly by two or more parties of

different profiles, the ABSD rate applicable will be based on

the profile with the highest ABSD rate.

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5

Changes to ABSD rates w.e.f. 6 Jul 2018

Note: Additional Conveyance Duties will be based on prevailing BSD and 30% ABSD

Current Rates Revised Rates

SC buying 1st residential property 0% 0%

SC buying 2nd residential property 7% 12%

SC buying ≥ 3rd residential property 10% 15%

SPR buying 1st residential property 5% 5%

SPR buying ≥ 2nd residential property 10% 15%

Foreigner buying any residential property 15% 20%

Entities buying any residential property 15% 25%

Plus additional 5%

for developers

Key Changes for Developers

• On top of ABSD rate of 25% for entities, developers defined to be entities

in the business of housing development (i.e. construction and sale of

housing units) with respect to the subject property purchased are subject

to an additional non-remittable ABSD rate of 5%.

• The ABSD rate of 25% for entities may be remitted under the Stamp

Duties (Non-licensed Housing Developers) (Remission of ABSD) Rules or

the Stamp Duties (Housing Developers) (Remission of ABSD) Rules on

application.

• Entities who are acquiring residential properties with no intention to

undertake housing development of the subject property should stamp

at the ABSD rate of 25%. 6

Key Changes for Developers

• It is important for the purchasing entity to decide whether it will

undertake housing development of the subject property at the point

of purchase, in order to ascertain the applicable ABSD treatment.

• For example:

a. Entities who paid the ABSD rate of 25% will not qualify for the ABSD

Housing Developers Remission, even if they fulfil the remission conditions

subsequently.

b. Developers who paid the ABSD rate of 5% and applied for the ABSD

Housing Developers Remission cannot withdraw their application

subsequently. If they are unable to meet the remission conditions, the

remitted ABSD of 25% will be recovered with interest.

7

ABSD Housing Developers Remission

How to Apply (for cases subject to the new ABSD rates)

• Complete the Application Form for ABSD Housing Developers

Remission available at IRAS website

• Email the typewritten form to estamp@iras.gov.sg within 14 days

from the date of execution of the document with the email subject:

“ABSD Housing Developers Remission – Insert Property

Address”

• Attach the supporting documents (executed Sale Contract and

prescribed Letter of Undertaking) together with the application form

Note: This mode of application is a temporary measure while we enhance our e-

Stamping system to serve you better.

8

Transitional Remission for ABSD and

How to Apply

Remission for Options issued on or before 5 Jul 2018

• What are the conditions?

1. The option to purchase (“OTP”) is granted on or before 5 Jul 2018;

2. The OTP is exercised^ on or before 26 Jul 2018 or the date of expiry of the OTP validity period,

whichever is earlier; and

3. The OTP is not varied (including any extension of the validity period) on or after 6 Jul 2018.

^Refers to date of signing of the Acceptance to OTP or the Sale & Purchase Agreement (whichever is applicable)

• How do I request for remission to apply ABSD rates before 6 Jul 2018?

1. Complete the Application Form for ABSD Transitional Remission available at IRAS website

2. Email the typewritten form to estamp@iras.gov.sg with the email subject: “ABSD Transitional

Remission – Insert Property Address”, within 14 days from the date of execution of the

instrument (No need to submit executed instrument unless requested by IRAS)

• Note: No application required for SC or SPR buying 1st residential property as there is no

change to their ABSD rates.

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Remission for Options issued on or before 5 Jul 2018

• When will I receive the stamp certificate?

1. IRAS will process your application within 1 month from the date of submission

2. You will receive an email on the payment instructions and to download your stamp certificate

after payment has been cleared

• Can I request to expedite the process to obtain the Stamp Certificate?

1. No. Applications are processed on a first-in-first-out basis and applicants should submit their

request early if they require the stamp certificate urgently.

2. To ensure that there are no delays, please complete all the necessary fields in the application

form in TYPEWRITTEN document format. Otherwise, you will be asked to re-submit.

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Remission for Options issued on or before 5 Jul 2018

• What if I qualify for both the ABSD Transitional Remission and ABSD

Housing Developers Remission, which application form do I use?

1. You should use the Application Form for ABSD Transitional Remission (same

instructions apply).

2. Check the relevant box for ABSD Remission for Licensed / Non-Licensed Housing

Developers in the application form

3. Attach the following supporting documents in your email application:

i. Option granted (if any)

ii. Executed Sale Contract

iii. Prescribed Letter of Undertaking

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Frequently Asked Questions

• Who should apply for the Transitional Remission?

• Generally, the application for transitional remission is submitted by the conveyancing law

firm.

• Does the qualifying residential property buyer need to e-Stamp and pay

stamp duties (BSD & ABSD) before applying for the transitional

remission?

• No. Payment can be made after IRAS processes the transitional remission application and

issues the instruction for payment.

• Do my clients (home buyers) need to sign on the application form for the

transitional remission?

• No, your clients’ signature are not required for the application.

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Frequently Asked Questions

• If an option was granted before 6 Jul 2018, but the buyers can only

exercise the option after 26 Jul 2018, will the buyers qualify for the

transitional remission?

• No. To qualify for the remission, the option must be exercised within 3 weeks of the 5 Jul

2018 announcement (i.e. exercised on or before 26 Jul 2018) or the Option validity period,

whichever is earlier.

• Will my clients qualify for the transitional remission if there is variation

in the option terms (e.g. completion date, furniture offerings, etc.) on or

after 6 Jul 2018?

• No. The transitional remission will not apply to any instrument where the option has been

varied on or after 6 Jul 2018, even if the option period remains unchanged.

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Frequently Asked Questions

• If an option was granted before 6 Jul 2018, and the buyers exercise the

option by way of a Sale and Purchase Agreement (for uncompleted

properties), will the buyers qualify for the transitional remission?

• Yes, if the option is not varied on or after 6 Jul 2018 and is exercised within 3 weeks of the

5 Jul 2018 announcement (i.e. exercised on or before 26 Jul 2018) or the Option validity

period, whichever is earlier.

• Will my clients qualify for the transitional remission if there was no

option issued prior to the Transfer instrument executed on or after 6 Jul

2018?

• No, there must be an option granted on or before 5 Jul 2018 for the transitional remission

to apply.

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Illustrations and Computation

General checklist to determine ABSD rate

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Does the acquisition involve residential property (by zoning

or permitted use)?

What is the profile of the buyer(s)?

Is the instrument executed on or after 6 Jul 2018?

Does the instrument qualify for transitional remission?

Does the buyer(s) qualify for other ABSD remissions?

• The Option to Purchase was issued on 1 Jul 2018 and has not

been varied on/after 6 Jul 2018. What is the ABSD payable?

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(1) Individuals acquired condo unit at $2m on 10 Jul 2018

ABSD computation: $2m x 7% = $140,000

Transitional

remission

applies

Residency

Status

Property

Count

prior to

purchase

Old

ABSD

rates

New

ABSD

rates

Buyer 1 SPR 0 5% 5%

Buyer 2 SC 1 7% 12%

If the buyers are married, they can apply for ABSD refund once the

ABSD spouses remission conditions are met.

• The residential and non-residential components were

valued at $0.4m and $0.6m respectively. What is the ABSD

payable?

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(2) HDB shop house acquired by SC at $1m on 1 Aug 2018

Residency

Status

Property

Count

prior to

purchase

Old

ABSD

rates

New

ABSD

rates

Buyer 1 SC 2 10% 15%

ABSD computation: $400,000 x 15% = $60,000

• The Option to Purchase was issued on 10 Jul 2018 and the

entity will not be undertaking housing development with

respect to the subject property purchased. What is the

ABSD payable?

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(3) Entity acquired residential land at $10m on 25 Jul 2018

ABSD computation: $10m x 25% = $2.5m

Profile Old ABSD

rates

New ABSD

rates

Buyer 1 Entity 15% 25%

• The Option to Purchase was issued on 10 Jul 2018 and the

entity will be undertaking housing development with respect

to the subject property purchased. What is the ABSD

payable?

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(4) Developer acquired residential property at $100m

on 25 Jul 2018

ABSD computation: $100m x 30% = $30m

Profile Old ABSD

rates

New ABSD rates

Buyer 1 Developer 15% 25% (remittable)

5% (non-remittable)

The housing developer may apply for remission on the 25%

ABSD ($25m) under the ABSD Housing Developers Remission.

ABSD Spouses Remission

ABSD Spouses Remission

Married couples with at least one SC spouse can:

• Enjoy full ABSD remission on the joint purchase of their 1st residential property.

• Apply for ABSD refund on the joint purchase their 2nd residential property

purchase, if the married couple:

a. does not own more than one property at the time of purchase of 2nd property

b. has paid ABSD on the 2nd property

c. sells their 1st property within 6 months after 1) the date of purchase of the 2nd

property or 2) issue date of TOP/CSC, whichever is earlier (if the 2nd property is

uncompleted)

d. does not acquired 3rd or subsequent property before sale of 1st property

e. remains married at the time of sale of 1st property

f. applies for ABSD refund within 6 months after sale of 1st property

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Avoid common pitfalls to qualify for ABSD Refund

• 2nd property must be purchased in both spouses’ names

• Couples should start the process to sell their first residential

property as early as possible to ensure the 6-month sale timeline

can be met (strictly no extension)

• Couples could also sell their first property first before purchasing

their replacement property

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Common queries on ABSD

Common queries on ABSD

• Do I (an SC) have to wait till the sale completion of my existing and only

residential property before I can purchase my next without incurring

ABSD?

• Once the contract for sale is executed for your existing property, it is considered sold and

you can purchase your next without incurring ABSD.

• If I inherit partial interest in my late parents’ residential property, will I

have to pay ABSD on my next home purchase?

• Yes, the inherited share will be part of your property count and your next purchase will be

subject to the applicable ABSD rate.

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Common queries on ABSD

• If I hold a residential property on trust for a beneficiary, will it form part of

my count?

• No, the residential property will be counted under the beneficial owners’ count, not the

trustee.

• If I am in the process of obtaining my SC or SPR at the time of purchase,

can I later apply for a remission to enjoy lower ABSD rates based on my

new residency status?

• The applicable ABSD rate is based on the nationality of the buyer on the date of purchase.

You must have been granted the residency status by the Immigration and Checkpoint

Authority (ICA) as at the date of purchase in order to enjoy lower ABSD liability. The date

of issue reflected in the IC collection slip would be taken as when the residency status was

granted.

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Thank You

For more information, please refer to www.iras.gov.sg

© 2018 Inland Revenue Authority of Singapore. All rights reserved. 31

The information presented in the slides aims to provide a better general

understanding of taxpayers’ tax obligations and is not intended to

comprehensively address all possible tax issues that may arise. This

information is correct as at 6 Jul 2018. While every effort has been

made to ensure that this information is consistent with existing law and

practice, should there be any changes, IRAS reserves the right to vary

its position accordingly.