Singapore plugs ABSD loophole on Living Trusts

Singapore plugs a loophole in local property market transactions by making ABSD applicable where a real identifiable beneficial owner is not stated or when a living trust is conditional or revocable. This rule change also impacts equity interests in residential property holding entities that are transferred into living trusts. ABSD is Additional Buyers Stamp Duty which was introduce to cool a highly speculative property market. With no capital gains tax or inheritance taxes in Singapore, global liquidity flows were responsible for rampant property price increases that were not in line with the economic growth or personal income growth. The local population would thus be chasing ever higher property prices leading to unsustainable leverage and debt exposure which could be financially destructive in adverse conditions. ABSD was introduced along-with debt limits called the Total Debt Servicing Ratio, Loan to Value Ratio for mortgages and Mortgage Servicing Ratio to further contain speculation and over leverage.

This 35% ABSD rate for transfers of property to a living trust will help to reign in speculative forces that need to pay a high tax upfront in cash. Flippers will also stay away as the property must appreciate in excess of 35% + other closing costs before the owner will realize a profit.

Additional Buyers Stamp Duty tax on residential properties bought for living trusts