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The new additional buyer’s stamp duty will come into effect from May 9

Over the weekend, the Ministry of Finance (MOF) announced that if you are transferring a residential property into a living trust, you will be subject to an additional buyer’s stamp duty (ABSD) of 35 per cent from May 9, 2022.

The news comes after the Government announced its most recent round of property cooling measures last year in December.

Under those measures, the ABSD was raised to 17 per cent from 12 per cent for Singaporeans who were buying their second property.

If you aren’t sure what this means for you, here’s everything you need to know.

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What is a living trust?

A living trust is something that is created by an individual while they are alive where they designate a person (or trustee) to manage their assets for the benefit of the eventual beneficiary.

When would I need to pay a buyer’s stamp duty (BSD)?

A BSD is a tax that is paid on documents signed when an individual buys or acquires property located in Singapore, according to the Inland Revenue Authority of Singapore (IRAS).

Currently, you will need to pay a BSD when a residential property is transferred to a living trust.  

When would I need to pay an ABSD?

An ABSD may be payable on top of a BSD depending on the profile of the beneficial owner of the property that has been transferred into the trust. Currently, ABSDs do not apply where there are no identifiable beneficial owners at the time the property is transferred.

The new law will address this gap, according to MOF. 

“With this change, ABSD will be payable even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust,” it said.

This will promote a stable and sustainable residential property market, it added.

Are there conditions where I can apply for a refund on the new ABSD?

The new ABSD is payable upfront as soon as the residential property is transferred to a living trust.

However, a trustee may apply to the IRAS for a refund of the new ABSD if certain conditions are met. For example, this is applicable if all beneficial owners are identifiable and the beneficial ownerships have been vested in all of them and cannot be revoked, varied or subject to subsequent conditions.

You can then make an application for a refund to IRAS within six months after the instrument is executed. 

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