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Best Legal Ways to Beat ABSD and Own Multiple Properties in 2020:

Updated: Jun 24, 2020

Hi, this is Jeslyn Tan, a legal property advisor in Singapore. Over the years I have guided many clients in purchasing multiple properties and almost each of them asked me the same question, “How can I avoid paying ABSD?” So in this blog I will share some of the insights with you which will definitely help you in avoiding paying ABSD.


Following are the best ways to legally save on ABSD

  • Buying property under only one owner so that the spouse can buy another one under their name

  • Decoupling an owner from an existing property so that one name is freed up

  • "Unofficially" buying a property under your child's name more than 21 years old

  • Using a Property Trust for children below 21 years old to buy a property

1) Buying property under only one owner so that the spouse can buy another one under their name:

It is one of the easiest way to have two assets in the household. Like a flat or condominium, make sure you or your partner are not recorded as the co-owner when purchasing your house in case of an HDB apartment listing them.

This does mean that only the selected owner is obliged by legislation to pay mortgage. Later on, as soon as your spouse buys a Property, they can do this as a first-time home buyer and not cover ABSD.


Important points of this method are:

- Use of owner's CPF funds only.

- The owner must be compatible according to requirements to get a loan

- Servicing Ratio must be less than 30%

- Total Debt Servicing Ratio must be less than 60 % of the sole borrower's monthly income

- Mutual interaction must be in between both parties

2) Decoupling an owner from an existing property so that one name is freed up:

This is when one co-owner transfers their share of the property to another co-owner(s). As soon as the party buys a home, they will be counted as a house buyer.

Decoupling has been a method as married couples in the past, as a standard, purchased houses before the execution of ABSD. It's just the elimination of 1 owner from the property through the "buy out" from another party.

It is just the remove 1 vendor from the assets through the buyout by the other party. It’s also called the part-sale or part purchase. Some permutations evolved as a result of insufficient financing skills.


For example:

Say you and your partner purchase assets in shared lodgers. This lets you split ownership of the house. Its most important benefit is that both incomes may be used for loans.

With the support of this, you can save money for future investment. You'd then sell your 1 percent ownership to your partner, who incurs a Buyer Stamp Duty (BSD) only on the value of this 1 percent being transferred. Before it can be redeemed through CPF, this amount has to be paid in money. This amount has to be paid through cash.

This is why most people don't opt for splits like 50-50, as it would incur a much higher BSD/SSD when they make the transfer.

Other fees that are usually incurred in the decoupling process include conveyancing fees for the consultation of two attorneys representing each party (Yes, the legislation requires that one act for the vendor and another bill for the buyer) and potentially mortgage loan restructuring fees and penalties.

After this sale's exercise, the party can proceed to buy another property as a house buyer without incurring ABSD. There's not any need to wait the completion of this decoupling before buying any other assets.

Important points of this method are:

You must have sufficient money to take over the loan that is complete and to return. In case you have less funds, you must go for creative financing methods that can assist you to gain your goals.

You would have to accept a way of holding such as 99-1 might not reflect the reality of this circumstance. 2 law firms would be needed for decoupling; for 4-6 weeks, and costs a total of S$5,000-6000/-. You have to concern with experts.

3) "Unofficially" buying a property under your child's name:

You provide the money to make the payment, although this is when your child purchases a property under their title. The 1st possible blind spot is that your kids now count as personal property owners.

If they were to get married and buy a property of the owner, you would need to dispose of or transfer the property back with ABSD payable. The next blind spot is that your kids have to be eligible for the home loan. For that, they would need to have income proof. This may not be a solution if they aren't working yet.

Your kids legally own the home; they could sell it, use it. This can lead to some ugly family disputes. It is significant to deliberate all conceivable matters that may rise in the future.

4) Using a Property Trust for children below 21 years old to buy a property:

This method requires cash to purchase property without a CPF or loan usage. Below 21 years of age, you can establish a property trust for your child with this process. You need to pay for expenses and any taxes on the property.

If you are ever declared bankrupt debtors can't seize the property. In the eyes of the law, the property isn't "yours".

However, make sure this means the assets along with any rent payment or any other income goes to your child. That issue can be resolved by opening a joint account prevailing in both your names though. Further, banks do not provide loans for those assets under a trust, so be ready to pay for the full assets worth in cash.


For the creative ones, you might be thinking, why can't I set up a trust under my above 21-year-old child?

Well, law firms do not take up cases of a property trust of a child who's the age of majority, past 21 years old, as they are implicated by it in abetting ABSD avoidance.

Finally, you could consider investing in commercial and industrial real estate, if you're ready to take the plunge.

Sections like shop houses, trade fronts, F&B channels, offices and industrial B1/B2 sites all have numerous risks and revenues which aren't appropriate for everybody. Nonetheless, they are only subject to GST (If the vendor is GST registered), and there is no ABSD payable.


So which is the best method?

There are different methods which can be used and they depend on strategies, family profile, and your financial situation. In actuality, you will find innovative hedging strategies that consist of layering methods in various orders (Document-able & un-documentable ones) to assist investors in owning more properties, obtain increased financing and save on expenses and tax. Since they're more complicated, they are less suitable to be written for the masses.


If you need any guidance, you can reach out below to programme a video discussion.


Need advice for your upcoming property investment plans? Or help to get your property sold or rented?

Get a free 30 min that is 1-time Property Wealth Planning consultation. A PWP appointment includes:

- A deep financial affordability assessment

- Investment tips & advanced strategies

- A customized and transparent investment road map for your real estate investment journey.

I have already assisted numerous clients to raise their fortune by choosing ideal property investments and handling their portfolios energetically.

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