ABSD vs BSD: What’s the difference?

In Singapore, there are two types of stamp duties imposed on the buyer; one is called Additional Buyer’s Stamp Duty (ABSD), and the other one is Buyer’s Stamp Duty (BSD).

Basically, Stamp Duty is a tax on documents related to the purchases and leases of properties (e.g. Sales & Purchase Agreements, Tenancy Agreements etc.). All types of stamp duties in Singapore are to be paid to the Inland Revenue Authority of Singapore (IRAS).

All property buyers have to pay BSD in Singapore. On the other hand, ABSD applies on top of BSD payable on the purchase of immovable residential properties in Singapore.

What is ABSD?

When you buy a property in Singapore, you’re subjected to Buyer’s Stamp Duty (BSD).

In the simplest of terms, ABSD is a government tax typically charged on the purchase of a second and subsequent residential property.

These include HDB flats, residential shop-houses (ABSD not applicable on commercial shop-houses), condos and landed properties. However, ABSD is charged depending on the buyer’s residential status.

ABSD is a cooling measure implemented by the government to keep property prices affordable for Singapore citizens by managing the demand for residential properties. It also aims to discourage foreigners and other entities from purchasing residential properties and multiple residential properties.

ABSD was introduced back in December 2011 by the government, which aims to moderate demand for residential property, thereby ensuring that residential property remains affordable for Singaporeans and that prices move in tandem with economic fundamentals.

The ABSD rates were last revised on 6 July 2018 to stabilize the residential property market and avert the risk of a more drastic price correction in the future, which could have a destabilizing effect on the economy.

Who needs to pay ABSD and what are the rates?

ABSD applies to the following group of property buyers:

• Singapore Citizens:

ABSD will be levied on the second (12%) and subsequent (15%) property purchases.

• Singapore Permanent Residents (PRs):

ABSD will be levied on all purchases. The first purchase will be 5% while the second and subsequent purchases will be 15%.

• Foreigners:

20% ABSD for any property purchase.

• Entities (companies or associations):

25% for each property

ABSD Exemptions

• For the first matrimonial home:

If you’re Singaporean, married, and buying your first property to stay in, you can apply to have your ABSD refunded even if your spouse is a permanent resident or foreigner.

For example, a Singaporean husband and a foreigner wife jointly purchase their first residential property to be used as their matrimonial home. They would first have to pay 15% ABSD (based on the status of the foreigner wife). They can then apply for remission for ABSD.

• In case of selected nationalities:

1. United States of America
2. Norway
3. Switzerland
4. Iceland
5. Liechtenstein

Thanks to the Free Trade Agreement, nationals and permanent residents (it is to be mentioned that only nationals of the United States are given the same treatment as Singaporeans, permanent residents are not included) from these countries would be given the same treatment as Singaporeans when purchasing a property.

• On the upgrading of your matrimonial home:

If you buy another property as a married couple to stay in and sell your first property within 6 months, you can apply for ABSD remission. If the property purchased is uncompleted, you can apply for ABSD remission as long as your first property is sold within 6 months from the date of issue of Temporary Occupation Permit (TOP) / Certificate of Statutory Compliance (CSC). You must not have bought any other residential property after purchasing the second one.

• For Developers:

If you are buying residential land and developing four or fewer residential units, you can also apply for ABSD remission.

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What is BSD?

BSD is tax paid on documents signed when you buy or acquire property located in Singapore.

Who needs to pay BSD?

The property buyer is liable to pay the Buyer’s Stamp Duty (BSD). Examples of property acquisition in which stamp duty is payable are given below:

1. By way of purchase e.g. acceptance to option to purchase, sale and purchase agreement
2. By way of gift including a voluntary declaration of trust and settlement

Declaration of Trust / Trust Deed:

1. A fixed duty of $10 is payable on the Declaration of Trust/Trust deed, which does not result in a change in the beneficial interest in the property.
2. Where there is a change in the beneficial interest in the property, full stamp duty (i.e. BSD, ABSD and SSD, whichever applicable) will be payable on the Declaration of Trust / Trust Deed.
3. By way of distribution in species upon the winding up of a company
4. By way of distribution from the estate of a deceased that is not according to the Will, Intestate Succession Act or Muslim Law of Inheritance.

What are the BSD Rates?

BSD is computed based on the purchase price or market value of the property, whichever is higher.

Prior to 20 Feb 2018, the BSD rate was up to 3%. With effect from 20 Feb 2018, there are differentiated BSD rates between residential and non-residential properties. The BSD rate for acquisition of residential properties on or after 20 Feb 2018 is up to 4%.

The BSD rates before and after the 2018 Budget changes are as follows:

BSD is rounded down to the nearest dollar, subject to a minimum duty of $1.

As you can see, the more expensive your property, the higher the overall BSD rate you’ll be obliged to pay.

Who is exempted from BSD?

There are some instances where BSD won’t be applicable:

1. Aborted sale and purchase of properties
2. Transfer of HDB flat within the family
3. Transfer of assets between associated permitted entities
4. Transfer of assets upon reconstruction or amalgamation
5. Acquisition of a residential property on, or before 19th February 2018

• The Option to Purchase is granted on or before 19th February 2018 and is exercised before 12th March 2018

1. Acquisition of residential land for non-residential development

If your property purchase falls under any of these categories, you can write to the Inland Revenue Authority of Singapore (IRAS) within 14 days of acquiring the property.

You will need to send in a:

• copy of the acquisition
• the original letter of undertaking to comply with the remission conditions, and
• other documents or evidence necessary for the application.

If the transaction happens overseas, the BSD will need to be paid within 30 days of the documents being received in Singapore. You can’t pay for the BSD in instalments, so you’ll need to make sure you have enough to cover the full amount.

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