New ABSD on trusts plugs loophole

Effective from May 9, 2022, Additional Buyers Stamp Duties (ABSD) of 35% will be imposed on any transfer of a home into a living trust and is payable upfront. A spokesperson for the Ministry of Finance said, “ABSD (Trust) addresses and closes the earlier gap in the ABSD regime, by applying ABSD on transfers of residential property into living trusts, even when there is no identifiable beneficial owner.”

In summary, this will prevent buyers from using trusts to acquire properties while delaying the payment of ABSD for a long time.

Parents using trusts to buy private homes for their children, who are under the age of 21 and are citizens, can get round the paying of ABSD as long as the home is the first to be held in the name of the child. As a concession, a trustee may apply to the Inland Revenue Authority of Singapore for a refund of ABSD (Trust), subject to meeting various conditions.  

Conditions include all beneficial owners of the home being identifiable individuals, and beneficial ownership of the home being vested in all of these beneficial owners at the time of property transfer into the trust.  The beneficial ownership cannot be varied or revoked, or be subject to any condition subsequent, under the terms of the trust. The amount refunded will be based on the difference between the ABSD (Trust) rate of 35% and the ABSD rate corresponding to the profile of the beneficial owner with the highest applicable ABSD rate. 

Feedback from analysts indicated that the overall market impact is minimal, as the majority of property purchases are not made via trusts. Besides the wealthy, very few people will buy a property under trust as this means full payment in cash.