Using a nominee buyer to sidestep Additional Buyer's Stamp Duty (ABSD) is not a grey area. A recent case makes that plain.
What happened
A woman arranged for her goddaughter to purchase a S$3 million apartment in her place, avoiding the ABSD she would have owed as an existing property owner. ABSD rates for Singapore Citizens buying a second residential property currently stand at 20%, which on a S$3 million purchase would amount to S$600,000. The goddaughter held the property nominally, with the beneficial interest remaining with the original buyer.
The arrangement then required a further step: the goddaughter transferred a 1% share of the property back to the original buyer so that she could apply for a bank mortgage in her own name. That transfer is what exposed the structure. Banks verify ownership, cross-reference IRAS records, and are required under MAS guidelines to conduct due diligence on borrowers and the source of funds. A sudden 1% transfer from a younger, unrelated party to the loan applicant is exactly the kind of anomaly that triggers scrutiny.
Why nominee structures fail on multiple fronts
The legal exposure is the most immediate problem. Under the Stamp Duties Act, any arrangement where the named buyer holds property on behalf of another person, with the intent to avoid stamp duty, constitutes a sham transaction. IRAS can recover the full ABSD owed, impose penalties, and refer cases for prosecution. The duty evaded does not disappear; it becomes a liability with interest.
The financing problem compounds the legal one. When the original buyer needed a mortgage, she could not apply without being on the title. The 1% transfer solved that problem but created a paper trail connecting her to the property she had nominally kept off her record. Banks assessing the loan would see her as a co-owner, which means her Total Debt Servicing Ratio (TDSR, the MAS cap limiting total monthly debt repayments to 55% of gross monthly income) and Loan-to-Value (LTV) limits would be calculated on that basis. Any prior outstanding mortgage would reduce the LTV ceiling on the new loan from 75% to 45%.
In short, the nominee structure achieved neither goal cleanly. It did not permanently remove ABSD liability, and it did not produce a clean mortgage application.
What banks and regulators are looking for
MAS requires financial institutions to apply customer due diligence under the Notice on Prevention of Money Laundering and Countering the Financing of Terrorism. Unusual ownership transfers shortly before a loan application, mismatches between the declared purchase price and the applicant's financial profile, and third-party fund flows into the purchase all fall within the scope of that scrutiny. Banks that approve loans on structures later found to be fraudulent face their own regulatory consequences, which is why underwriting teams treat these signals seriously.
IRAS has also signalled that it monitors property transactions for patterns consistent with duty avoidance. The 1% transfer in this case was not a minor administrative step; it was the thread that unravelled the arrangement.
The practical position for buyers facing ABSD
ABSD is a significant cost. At 20% for a second property purchased by a Singapore Citizen, it changes the investment calculus on most transactions. That pressure is real, and it explains why buyers look for ways around it.
The legitimate options are limited but exist. Married couples where one spouse has no existing property can structure ownership accordingly, subject to the rules on decoupling and the associated BSD (Buyer's Stamp Duty) costs. Selling the first property before purchasing the second removes the ABSD exposure entirely, though it creates a timing and housing gap. Trusts and corporate structures are sometimes discussed, but MAS and IRAS have progressively closed those routes, and the compliance costs typically exceed the duty saved.
Nominee arrangements are not among the legitimate options. The case reported on 2 May 2026 is a reminder that the cost of getting this wrong, back-taxes, penalties, a derailed mortgage, and potential prosecution, is substantially higher than the ABSD itself.
Sarah Chen
