Small ABSD reduction for developers
Budget 2024 has a good news for property developers. The ABSD “penalty” for unsold properties after 5 years has been reduced, but just so slightly.
When developers purchase a land, they have to pay ABSD of
- 5% plus
- 35%, which is remittable after ALL units are sold
If developers have 1 unit unsold after 5 years, they will not be able to claim back the 35% paid. This punishment is a hefty one, therefore developers often have to aggressively market their remaining units nearing the ABSD dateline.
What’s new?
As per the new revision, the 35% remittable is discounted if the developer sold more than 90% of the units. The exact remission clawback is as such:
| % Units Sold (rounded down) | ABSD Remission Clawback | Claim Back |
|---|---|---|
| 100% | 0% | 35% |
| 99% | 25% | 10% |
| 98% | 26% | 9% |
| 97% | 27% | 8% |
| 96% | 28% | 7% |
| 95% | 29% | 6% |
| 94% | 30% | 5% |
| 93% | 31% | 4% |
| 92% | 32% | 3% |
| 91% | 33% | 2% |
| 90% | 34% | 1% |
| < 90% | 35% | 0% |
If a project has sold 99%, the ABSD will be 25% (instead of 35%). That is they are able to claim back 10% for being so close to selling all.
It is still very punitive because 1 unsold unit will cost the developer 25% of the TOTAL LAND COST.
As such, ABSD firesale will still be relevant 🔥
