Think one can outsmart the authorities when buying properties in Singapore and not pay extra levies. Think again. In a move to close the loophole, the government has imposes Additional Buyer’s Stamp Duty (ABSD) of 35% on residential homes transferred into a trust where there is no identifiable beneficial owner, effective 9 May 2022, the Ministry of Finance reported.
Points to Note:
· Prior to the newly minted 9 May 2022 ruling, when a residential property is transferred into a living trust, Buyer’s Stamp Duty (BSD) is payable. ABSD may also be payable, depending on the profile of the beneficial owner(s) of the residential property transferred into the trust.
· Additionally, where the living trust is structured such that there is no identifiable beneficial owner at the time when the residential property is transferred into the trust, ABSD currently does not apply.
Well that has changed.
1. ABSD will now be payable, even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust. ABSD aims to promote a stable and sustainable residential property market, and as such, it should apply to transfers of residential properties into all living trusts, irrespective of whether there are identifiable beneficial owners of the residential properties transferred into such trusts.
2. ABSD (Trust) needs to be paid up front, when the residential property is transferred into any living trust.
As a concession, a trustee may apply to IRAS for a refund of ABSD (Trust), provided that the following conditions are met:
a) All beneficial owners of the residential property are identifiable individuals;
b) Beneficial ownership of the residential property has vested in all of these beneficial owners at the time of property transfer into the trust; and
c) The beneficial ownership cannot be varied or revoked, or be subject to any condition subsequent, under the terms of the trust.
The application for a refund must be made to IRAS within six months after the instrument is executed. The refund amount will be the difference between the ABSD (Trust) rate of 35% and the ABSD rate applicable to the beneficial owner’s profile, with the highest applicable ABSD rate.