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how to decouple a property in singapore

What is Decoupling and How Can It Help You in Buying a Second Property? | Ohmyhome

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Buying a second property may be a dream come true to many but, in Singapore, it also means having to pay the hefty Additional Buyer’s Stamp Duty (ABSD). 

If you’re buying a second property, the ABSD for Singapore Citizens is 17% of the purchase price, or the current market value of the property, whichever is higher. It is 25% for Singapore Permanent Residents and 30% for foreigners.

The property tax was introduced by the government to cool a heated market, similar to other property cooling measures such as the Seller Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR).

However, many married couples in Singapore have found a way to buy a second home without having to pay the ABSD – in a process called decoupling. 

What is decoupling?

Joint homeowners can “decouple” when one co-owner transfers his/her share to the other, relinquishing his/her ownership completely. Now, this owner will be treated as a first-timer, as if he/she has not bought or owned a property before. Meaning, he/she can buy a second property without incurring any ABSD. 

Take this for example: If you decide to buy a $1m second property for investment without decoupling, you will have to pay an ABSD of at least $170,000 (assuming you’re a citizen buying a second property). But by decoupling, you can save the amount and use it for other home-related purchases such as home renovation and/or furnishings.

Property Tax What you pay if you don’t decoupleWhat you pay if you decouple
Additional Buyer’s Stamp Duty (ABSD)$170,000 N/A
Buyer Stamp Duty (BSD)$24,600$24,600
Total$194,600$24,600 

Please note that the calculation only illustrates the cost of the ABSD and does not include other costs, such as outstanding home loans and the Central Provident Fund (CPF) monies to be returned. We have added a more detailed decoupling scenario at the end of this article.

Sounds good, right? Unfortunately, it is not suitable for everyone. 

Some headwind for HDB owners thinking about decoupling

HDB flat owners have not been allowed to transfer their ownership to a family member since 2016. Decoupling is only allowed under these six circumstances:

  1. Marriage
  2. Divorce
  3. Death of an owner
  4. Financial complications
  5. Renunciation of citizenship
  6. Medical reasons

In most scenarios, decoupling will only be possible for private properties.

How can private homeowners decouple their property?

There are two ways for private homeowners to practice decoupling: by way of sale (part purchase) and through a transfer as a gift. 

Transfer by way of sale (part purchase)

This process involves one party legally buying all the remaining shares of the property from his/her spouse. All the terms of the contract would need to be spelt out in the sale and purchase (S&P) agreement and is usually drafted by a lawyer or conveyancer.

To complete the transaction, the buyer would have to pay the seller for his/her rights to the property, as stated in the S&P agreement, and the BSD to the Inland Revenue Authority of Singapore.

Buyer Stamp Duty (BSD) with effect from (wef) 20 Feb 2018

Payment Schedule% of Stamp Duty
First $180,0001%
Next $180,0002%
Next $640,0003%
Remaining Amount4%

Seller Stamp Duty (SSD) wef. 11 Mar 2017

Holding Period% Seller Stamp Duty
Up to 1 year12%
More than 1 year and up to 2 years8%
More than 2 years and up to 3 years4%
More than 3 yearsNo SSD payable

The lawyer would then use these proceeds to pay off the seller’s existing mortgages, CPF used, and SSD (if any) before transferring the ownership to the buyer. Should you require any assistance on this, WhatsApp us at 9755 9283 and our Relationship Managers and Super Agents will advise and assist you accordingly.

Scenario A: Joint ownership (50-50) by John and Amanda

In this scenario, John and Amanda (both Singaporeans) are joint owners with equal shares to a condominium unit for more than four years. This is also known as a joint-tenancy, meaning both John and Amanda have a 50% share of the property. 

Most properties owned by couples are shared 50-50 ownership.

In the event that one co-owner passes away, the other co-owner will inherit the entire property under the right of survivorship. This is regardless if there is a will left by the deceased.

Now imagine John earns a high and stable income. He can get a bigger loan to buy a landed property for his family to move into, but the ABSD would be a substantial cost.

How John and Amada can decouple the condo:

Current condo valuation: $1m

Existing home loan balance: $500,000 (split equally between John and Amanda since each of them owns 50% of the property)

50-50% part share selling price (Since both John and Amanda owns 50% shares each in the property): $500,000 ($1m/2)

John sells 50% shares to AmandaAmanda buys 50% shares from John
Sale price: $500,000Purchase price: $500,000
Pay off original home loan: $250,000How Amanda pays: 
(a) 30% (Cash + CPF): 150,000 (min. $25,000 in cash) 
Return to John’s CPF: $150,000 (including accrued interest) Other expenses for Amanda (Cash/CPF):
(b) BSD (Purchase price*3% (-$5,400): $9,600
(c) Estimated legal fees (2 firms): $5,500
John’s cash proceeds: $100,000(a + b + c) Total cost for Amanda: $165,100
(d) 70% New home loan: $350,000
(e) Amanda’s existing home loan with the bank: $250,000 

(d + e) Amanda’s new loan amount after the decoupling process: $600,000

After decoupling, John will receive $100,000 in cash proceeds, which he may use for his new home purchase that’s ABSD-free.

However, Amanda will have an increased loan amount of $600,000. This is a heavy financial burden for just a single income to support, and is not recommended for everyone. 

So we highly encourage you to speak to our Super Agents before decoupling. They can assist you with the correct financial planning, with the help of our mortgage partners, so you can meet your property goals without overwhelming your finances.

However, not all properties are held in joint-tenancy or equal shares like the scenario above.

Scenario B: Tenancy-in-common (99-1) ownership

In this new scenario, John and Amanda are tenants-in-common. This means, instead of a 50-50% split ownership between John and Amanda, John would hold 1% share of the property, and Amanda the remaining 99%.

John sells 1% share to AmandaAmanda buys 1% share from John
Sale price (1% of $1m): $10,000Purchase price (1% of $1m): $10,000
Pay off original home loan: $5,000How Amanda pays: 30% (Cash + CPF): $3,000 (min. $500 in cash)
Return to John’s CPF: $0 Other expenses for Amanda (payable Cash/CPF):
BSD: $100
Estimated legal fees (2 firms): $5,500 
John’s cash sales proceeds: $5,000Total cost for Amanda: $8,600
70% New home loan: $7,000 Amanda’s existing home loan with the bank ($500,000 x 99%): $495,000 

Amanda’s new loan amount after the decoupling process: $502,000

Now John may proceed to buy a new property without incurring any ABSD because he has effectively sold all the shares of his property to Amanda.

And under the 99-1 rule, the BSD fee payable is only 1% at $100, which is much lower than the $9,600 buyer’s stamp duty in the first scenario. Only the legal fees will stay the same. 

The risk in this scenario will arise in the event of a divorce, where one party will own 99% of the house. You may battle this out in court, but it may take time and result in higher legal costs. 

2. Transfer as a gift

You can transfer your share of a property as a gift without receiving any payment, but it is only possible if there are no outstanding mortgage or CPF monies tied to the home purchase. 

Is decoupling for you?

Before decoupling your property with your spouse, speak to a certified realtor and check all the costs and risks involved. Some couples may think it’s better (and quicker) to pay the ABSD and move on, but others may be more hesitant. Wherever you fall in this spectrum, it is always prudent to get expert property and mortgage advice. For any home loan enquiries, you can call us at 6866 9009.

Let our Super Agents assist you in selling and buying a home with the right timeline and financial planning. WhatsApp us at 9755 9283 or click the chat button at the bottom-right corner of the screen, and our Relationship Managers will be in touch with you right away. 


Frequently asked questions about decoupling

1) What happens if I do not have sufficient CPF for the downpayment, stamp duty or legal fee?

All payable costs/fees would be paid in cash if you have insufficient CPF savings.

2) Can I get a mortgage loan for my second property?

Please remember to consider the Total Debt Servicing Ratio (TDSR), which sets a monthly repayment threshold for property loans at a maximum of 60% of the borrower’s monthly income.

The eligible loan amount may vary between partners as it is dependent on income, employment, credit standing, etc. Check with your bank mortgage officer on your eligibility.

3) As the seller, can I keep the sales proceeds as cash after decoupling?

All CPF Ordinary Account funds and accrued interest used towards the payment of the property must first be returned to the CPF Board. The remaining surplus would be returned to the owner as cash.

Research by: Benjamin Su

Edited by: Ted Chen

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Need Advice on Decoupling?

Our agents can help you work out the financials to see if this process is right for you!

Need Advice on Decoupling?

Our agents can help you work out the financials to see if this process is right for you!

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