For most Singaporeans, owning their own home is a dream.
But some may also want to make preparations for the property’s ownership after they’re gone.
Hence, they might transfer the property to a living trust, even when there’s no beneficiary identified yet.
However, they will now find themselves paying more, as Additional Buyer’s Stamp Duty (ABSD) is now applicable to all such property transfers to trusts.
Source: Unsplash
Refunds are possible, though, provided certain conditions are met.
In a press release on Sunday (8 May), the Ministry of Finance (MOF) said the new fee would apply to transfers occurring from Monday (9 May).
Called ABSD (Trust), it will amount to 35% of the selling price, on any transfer of residential property into a living trust.
This is even if there is no identifiable beneficial owner during the time of transfer.
It has to be paid upfront upon the transfer taking effect.
Currently, when a residential property is purchased in Singapore, the home buyer has to pay a Buyer’s Stamp Duty (BSD).
The same goes if the property is transferred to a living trust, which is created by someone during their lifetime. It allows a trustee to manage the asset on behalf of the eventual beneficiary.
ABSD would also be payable depending on the profile of the beneficiary.
However, before the new rule took effect, if there was no identifiable beneficial owner during the time of transfer, ABSD didn’t apply.
An “identifiable beneficial owner” means that person is identified in the trust deed as a beneficiary, and their beneficial ownership isn’t revocable, variable, or subject to any condition subsequent.
Source: Unsplash
This loophole ostensibly meant that people could avoid paying ABSD by not identifying a beneficiary, though they may already have one in mind.
The Government introduced ABSD (Trust) “to address and close this gap”, MOF said.
They reasoned that ABSD should apply to all residential property-to-living trust transfers, whether or not there are identifiable beneficial owners.
In this way, a “stable and sustainable residential property market” will be promoted.
The trustee can apply to the Inland Revenue Authority of Singapore (IRAS) for a refund, as a concession.
This application must be made within six months after execution of the instrument.
However, some conditions must be met for the refund, for example all beneficial owners of the property are identifiable individuals.
Source: Flickr
If a refund is allowed, it will be calculated based on the difference between the ABSD (Trust) 35% rate and the ABSD rate corresponding to the profile of the beneficial owner with the highest applicable ABSD rate.
Notably, the Government introduced property cooling measures in Dec, including raising the ABSD from 12% to 17% for Singaporeans buying a second property.
With the added rules, those who want to transfer their residential property to a living trust may want to think twice.
If they still want to do it, they should make sure all beneficial owners of the property are identifiable.
Have news you must share? Get in touch with us via email at news@mustsharenews.com.
Featured image adapted from Mark C on Unsplash.
Singapore was not found on the list.
One man slammed a metal object repeatedly against the train doors.
A resident who lives next to the expressway complained of honking cars from 4am.
Rabbit is a healthier meat option as it's high in protein and low in fat…
She would even threaten her debtors with grave physical violence.
The canine showed gratitude for the man's food.