Singapore’s Additional Buyer’s Stamp Duty (ABSD)
In Singapore, the Additional Buyer’s Stamp Duty (ABSD) is a tax imposed on certain residential property purchases, particularly affecting foreign investors and those who already own residential property in Singapore. Introduced as part of cooling measures to stabilize the property market, the ABSD aims to control demand and maintain housing affordability for residents by increasing costs for foreign and multiple-property buyers.
What is the Additional Buyer’s Stamp Duty (ABSD)?
The ABSD is an extra tax on top of the Buyer’s Stamp Duty (BSD), which all property buyers in Singapore must pay. The ABSD rate varies depending on the buyer's residency status and number of properties owned at the time of purchase. This tax is mainly aimed at foreign buyers, corporate entities, and Singaporeans purchasing additional properties.
The current ABSD rates were last adjusted in 2023 to further temper demand and prevent housing prices from escalating beyond affordability for locals. Here’s a breakdown of the ABSD rates:
Buyer Type | First Property | Second Property | Third Property and Beyond |
Singapore Citizens (SC) | 0% | 20% | 30% |
Singapore Permanent Residents (PR) | 5% | 25% | 30% |
Foreigners | 60% | 60% | 60% |
Entities (including Companies) | 65% | 65% | 65% |
Note: Rates are subject to change by the Singapore government as part of cooling measures to adjust the property market.
Who is Affected by the ABSD?
Foreign Buyers:
Foreigners face the highest ABSD rate at 60% regardless of how many properties they own, making it considerably more expensive for non-residents to purchase residential property in Singapore. This rate is intended to reduce foreign demand and keep housing available for locals.
Permanent Residents (PRs):
Singapore PRs pay a reduced rate of 5% for their first property but are taxed at 25% and 30% for their second and third properties, respectively. This discourages excessive property investment and speculation by PRs.
Singapore Citizens:
Singaporean citizens are exempt from ABSD on their first residential property but must pay 20% for a second and 30% for a third, discouraging property accumulation.
Corporate Entities:
Entities, such as corporations and trusts, incur the highest ABSD rate of 65%. This rate targets speculative investments by corporate buyers and emphasizes the government’s focus on individual homeownership over corporate ownership.
Purpose of the ABSD
The ABSD was introduced to:
Control Property Demand: By increasing acquisition costs, the ABSD helps regulate demand from foreign buyers and investors, preventing excessive foreign influence on local housing prices.
Reduce Speculation: Higher ABSD rates discourage speculative investments, particularly by foreign investors and corporate entities.
Ensure Affordability for Singaporeans: With foreign and high-net-worth individuals potentially driving up property prices, the ABSD is intended to keep the market accessible for Singaporeans.
Calculating the ABSD
The ABSD is calculated as a percentage of the property’s purchase price or market value, whichever is higher. Here’s a simplified example:
Suppose a foreign buyer purchases a residential property valued at SGD 2,000,000. The ABSD calculation is as follows:
The ABSD due is SGD 1,200,000, in addition to any other taxes or fees payable upon purchase.
Exemptions and Remissions
Certain exemptions and remissions apply, primarily in cases involving spousal ownership and housing development projects. Key scenarios include:
Marriage between a Singaporean Citizen and a Foreign Spouse:
If a Singaporean citizen and their foreign spouse jointly buy a residential property, they may qualify for an ABSD remission, allowing them to claim back the ABSD paid, provided they meet specific criteria.
Housing Developers:
Developers may apply for ABSD remission if they commit to building and selling all units in a development within a specific timeframe.
Relocation for Employment:
Foreign buyers relocating to Singapore for employment purposes may receive ABSD remissions under certain circumstances, although this is less common.
Key Considerations for Foreign Investors
For foreign buyers considering investment in Singapore’s residential property market, the ABSD represents a significant cost. However, Singapore’s strong property market and stable political environment continue to attract high-net-worth individuals seeking long-term investments. Here are essential considerations:
High Initial Investment: The 60% ABSD rate means foreign buyers need to budget substantially more for a Singapore property, impacting overall ROI.
Limited Resale Market: With high ABSD costs, the resale market for foreign-owned properties can be more challenging.
Exploring Alternatives: Some foreign investors may consider commercial properties, which are not subject to ABSD, as a way to participate in Singapore’s real estate market without these added costs.
Conclusion
The Additional Buyer’s Stamp Duty (ABSD) in Singapore is a central part of the government's strategy to control property demand and ensure affordability. While the ABSD presents a considerable cost for foreign investors, Singapore’s thriving economy, secure property market, and strategic location make it an attractive investment destination for those willing to navigate these additional expenses. As always, investors should seek local legal advice and financial guidance to fully understand the implications of the ABSD and explore potential exemptions or remissions.
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