A Simple Guide to Decoupling Property in Singapore: Legal Ways to Avoid ABSD

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). The ABSD for Singapore Citizens (SCs) buying a second property is 20% of the purchase price, or the current market value of the property, whichever is higher. It is 30% for Singapore Permanent Residents and 60% for foreigners. However, many married couples in Singapore have found a way to buy a second home without having to pay the ABSD through decoupling. 

The truth behind property decoupling in Singapore

What is Property Decoupling?

Decoupling refers to the process where one co-owner transfers their ownership share of a property to the other co-owner, leaving one person as the sole owner. This allows the spouse or partner who relinquished their share to purchase another property in their own name without incurring ABSD.

Why Do Homeowners Choose to Decouple?

1. ABSD savings: SCs do not pay ABSD on their first property, but a second property is subject to a 20% ABSD. By decoupling, the spouse who transfers their share is considered a first-time buyer for the next property purchase.
2. Long-term investment: Allows one spouse to invest in a second property while maintaining ownership of the first.
3. Estate planning: Some homeowners decouple to facilitate property inheritance and wealth distribution.
4. Cash flow & financing flexibility: If one spouse has stronger financial standing, decoupling allows the sole owner to refinance the existing mortgage.

Joint Tenancy vs Tenancy-in-Common vs 99-1 Ownership

1. Joint tenancy

Under joint tenancy, all co-owners own the entire property together as a single entity. No owner has a specific share — each person owns 100% of the property. This means that all decisions regarding the property must be made jointly.

Key features of joint tenancy

• Right of survivorship: If one co-owner passes away, their share automatically goes to the surviving co-owner(s).
• Simplified ownership transfer: No need for a will or probate process.
• Common for married couples: Ensures smooth transfer of property.
• No individual shares: Co-owners cannot sell or transfer their portion separately.
• Not ideal for investment: Does not allow for flexible property distribution.

2. Tenancy-in-common

Under tenancy-in-common, each co-owner owns a specific share of the property, which can be equal or unequal (e.g., 70-30 or 50-50). Each share is distinct and can be sold, transferred, or inherited separately.

Key features of tenancy-in-common

• Distinct shares: Each owner has a separate percentage ownership.
• No right of survivorship: Upon death, the share is passed on according to a will or intestate law.
• More flexible for investment: Co-owners can sell or transfer their shares independently.
• More complex legal process: Requires a will for inheritance planning.

3. 99-1 ownership structure

A 99-1 ownership split is a type of tenancy-in-common where one owner holds 99% of the property, while the other holds 1%. This structure is often used by married couples as a strategic way to decouple in the future.

Key features of 99-1 ownership

• Easier decoupling process: The 1% owner can transfer their share with minimal stamp duties.
• Minimises Buyer’s Stamp Duty (BSD): When transferring the 1% share, BSD applies only to the small portion.
• ABSD reduction strategy: The 1% owner can purchase another property without incurring ABSD on the second property.
• Limited for true investment: Primarily a legal strategy rather than a balanced ownership structure.

Steps to Decouple an HDB or Private Property

Decoupling an HDB flat

HDB has strict regulations on ownership transfers. Decoupling is generally only allowed in specific scenarios, such as:

• Marriage (transfer between spouses)
• Divorce
• Financial hardship or medical reasons
• Death of an owner

HDB does not permit decoupling purely for investment purposes. To transfer ownership, co-owners must submit an application to HDB, and the new sole owner must meet eligibility conditions such as the Minimum Occupation Period (MOP).

Decoupling a private property

Private property owners have more flexibility in decoupling. The process involves:

1. Check ownership type: The property must be held as tenants-in-common.
2. Valuation of property: Engage a licensed valuer to determine the market value of the share being transferred.
3. Sale & purchase agreement: The spouse selling their share must sign an agreement transferring their ownership.
4. Stamp duties & legal fees: Pay applicable BSD and Seller’s Stamp Duty (SSD) if applicable.
5. Mortgage refinancing: If the property is still under a loan, the remaining sole owner must refinance it under their name.
6. Lodge the transfer with SLA: The transfer is registered with the Singapore Land Authority (SLA).

Legal & Financial Considerations

• Buyer’s Stamp Duty (BSD): The spouse buying over the shares must pay BSD based on the market value of the transferred share.
• Seller’s Stamp Duty (SSD): If the property was purchased less than three years ago, SSD applies.
• CPF refund: If CPF funds were used for the initial purchase, the selling spouse must refund the principal amount plus accrued interest to their CPF account.
• Bank’s consent: If there is an existing loan, the bank must approve the transfer and refinance under the sole owner.

Costs Involved in Decoupling

Can You Afford to Decouple? Get the Professional Advice of a Property Agent

Before decoupling your property with your spouse, speak to a certified property agent and check all the costs and risks involved. It is a huge financial responsibility, after all.

Drop us a message on WhatsApp to speak to any of our Super Agents or chat with us via our Live Chat at the bottom, right-hand corner of the screen.

Frequently Asked Questions About Property Decoupling in Singapore

Is property decoupling legal in Singapore?

Property decoupling typically refers to the process of one party removing their name from a property title to avoid Additional Buyer’s Stamp Duty (ABSD) when purchasing another property. This process is subject to prevailing property laws and regulations in Singapore, particularly those related to stamp duties and property transactions.

What are the benefits and risks of property decoupling?

Property decoupling offers benefits such as avoiding Additional Buyer’s Stamp Duty (ABSD), providing flexibility in ownership arrangements, aiding estate planning and asset protection, and potentially offering tax advantages. However, it carries risks including legal and regulatory compliance issues, financial implications such as transaction costs and impact on financing, potential loss of ownership rights or control, and exposure to market risks.

How does property decoupling affect property ownership and taxation?

Property decoupling involves transferring ownership of a property from one or more owners to another party, typically to reduce or avoid certain taxes such as Additional Buyer’s Stamp Duty (ABSD). This can affect ownership structure, decision-making rights, and tax liabilities related to rental income and capital gains. While property decoupling can be beneficial for tax planning and estate management, it requires careful consideration of legal and regulatory compliance, potential financial implications, and broader estate planning considerations.

Are there any restrictions or limitations on property decoupling?

Restrictions and limitations on property decoupling can vary depending on jurisdiction and circumstances but typically include regulatory constraints to prevent tax evasion or fraudulent transactions, such as minimum ownership periods and restrictions on transfer frequency. Tax laws may impose limitations to prevent abuse of tax incentives, like restrictions on claiming stamp duty exemptions within certain timeframes. Mortgage constraints could require repayment of existing mortgages or lender approval for decoupling. Decoupling arrangements must align with ownership rights and may need consent from all owners. Additionally, estate planning goals must adhere to inheritance laws and estate tax regulations.

How does property decoupling differ for HDB and private properties?

Decoupling an HDB flat, which means transferring the ownership of the flat from both owners to just one, is generally not straightforward due to the regulations set by HDB. There are specific conditions under which the transfer of flat ownership is allowed, including marriage, divorce, death of an owner, financial hardship, renunciation of citizenship, and medical reasons. Any other reasons for the transfer of ownership are assessed by HDB on a case-by-case basis. This means that decoupling for the purpose of avoiding Additional Buyer’s Stamp Duty (ABSD) or for investment purposes might not be possible under HDB rules. Meanwhile, the process of decoupling a private property is less complicated.

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.

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.

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.

Editor’s Note: In light of the 99-1 Tax Loophole, this guide doesn’t promote the practice of tax evasion but explains the process of legal decoupling.