What is Additional Buyer's Stamp Duty (ABSD) and who needs to pay it?

Additional Buyer's Stamp Duty (ABSD) is a supplementary stamp duty imposed on top of the standard Buyer's Stamp Duty for certain categories of property buyers. ABSD was introduced in December 2011 as a demand-side cooling measure to moderate the property market and has been revised several times since.

The current ABSD rates (effective from 27 April 2023) vary based on your citizenship status and the number of residential properties you own. Singapore Citizens pay no ABSD on their first residential property, 20% on their second, and 30% on their third and subsequent properties. Singapore Permanent Residents pay 5% on their first property, 30% on their second, and 35% on their third and subsequent properties. Foreigners pay 60% ABSD on any residential property purchase. Under Free Trade Agreements, nationals and permanent residents of the United States, Iceland, Liechtenstein, Norway, and Switzerland are accorded the same stamp duty treatment as Singapore Citizens.

Entities (companies and trusts) purchasing residential property are subject to 65% ABSD, though housing developers may apply for remission under certain conditions.

ABSD is calculated on the higher of the purchase price or the market value of the property. For a Singapore Permanent Resident purchasing their first property valued at S$1,500,000, the ABSD would be S$75,000 (5% of S$1,500,000). This is payable in addition to the BSD. For joint purchases by buyers of different profiles, the highest applicable ABSD rate applies to the entire property value.

ABSD must be paid upfront in full and cannot be paid in instalments. While CPF savings cannot be used to pay ABSD directly, buyers may apply for a one-time reimbursement from their CPF Ordinary Account after the ABSD has been paid in cash, subject to CPF withdrawal limits and eligibility.

Married couples where one spouse is a Singapore Citizen may qualify for ABSD remission or refund under two scenarios. First, if neither spouse owns any residential property, full ABSD remission may apply when purchasing their first joint property. Second, if the couple is purchasing a second residential property jointly, they may be eligible for a refund of the ABSD if they sell their existing property within six months of the purchase (or within six months of the Temporary Occupation Permit for uncompleted properties).

ABSD has a significant impact on investment decisions and portfolio planning. For Singaporeans considering a second property, the 20% ABSD adds a substantial upfront cost that must be factored into the investment return calculation. For Permanent Residents and foreigners, the rates are even more impactful.

Understanding ABSD implications is crucial before making any property purchase decision. Cashew's advisors can help you plan your property acquisition strategy to minimise or manage ABSD costs effectively.