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Singapore Property | Property decoupling in Singapore refers to buying the share of the wife or husband in a property that is commonly owned.

What causes many shareowners or couples to do decoupling? To release the ownership of the property to one person and avoid Additional Buyer's Stamp Duty (ABSD) when buying another property.

So, if before decoupling the property is commonly owned by husband and wife, after decoupling, it will be owned by either husband or wife.

Is property decoupling the best alternative to reducing ABSD? What effect does it have on loan and CPF?

Properties that can be decoupled

Married couples are not allowed to decouple in HDB. However, part purchasing is allowed if the existing family structure changes such as in the case of marriage, divorce, or demise of the owner or in the case where existing owners require changing ownership so that they can retain the flat.

Decoupling in private property does not have many restrictions except in the case of bankruptcy of one of the parties.

Methods used in private property decoupling are:

  • Gifting
  • Part purchase( with loan)
  • Part purchase(property fully paid)

Property decoupling

Gifting

This is done for a fully paid property where the ownership of the property is released to another party without a financial transaction.

However:

  • IRAS tax is payable
  • CPF money and its accrued interest need to be returned.
  • The creditor can seize the transferred shares if the transferor becomes bankrupt within five years from the date of transfer.

Part purchase of a property that is fully paid

Similar to gifting but with a monetary transaction.

Also

  • IRAS tax is payable
  • CPF money and its accrued interest need to be returned.

Part purchase of a property with outstanding loan

This method occurs the most. In the case where the husband buys the shares of the wife.

  • Husband to find a banker to refinance total loan outstanding.
  • Return the wife’s CPF amount that is outstanding and the accrued interest.
  • Two sets of lawyers, one for the buyer and one for the seller must be assigned.

CPF Effect

If CPF was used to buy the first property, you are not decoupling, and you want to use CPF again to buy the next property, then you are required to reserve Basic Retirement Sum. The sum depends on whether you are 55 years or below.

Loan effect

Without decoupling and with an outstanding property loan, you will get a maximum of 50% on your next property loan.

If decoupling, where the husband buys the share of the wife, then the wife can take 80% loan of buying the next property.

Stamp duty (SSD and ABSD) effect

Decoupling property is mainly done to reduce the stamp duty payable.

If a Singapore citizen buys the first property, there is no stamp duty. However, the second property attracts a 7% stamp duty while the third or more attracts 10%. A Singapore PR pays 5% stamp duty on the first property, 10% on the second, and 10% on the third.

A foreigner pays 15% stamp duty on all properties.

If you are interested to invest in another property after your decoupling, please take a look at some new launches in year 2018.

Landed property – you may click on Belgravia Villas phase 2 or Luxus Hills phase 8

Luxurious development – find out more at New Futura

Other areas – Tessensohn Residence at District 8, Twin Vew at West Coast or FiveNine at Telok Kurau.

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