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How do I decouple?
Understand why and how to decouple to avoid ABSD
What is decoupling?
Decoupling is for 2 co-owners where one transfers/sells his share to the other, so that he can go on to buy another property without incurring ABSD.
Singapore Citizen incurs 20% ABSD when purchasing 2nd residential property, so decoupling saves a big amount when a couple wants to own multiple properties.
HDB & EC prohibits
Since 2016, HDB has tighten rules and disallow transfer of ownership, except in these special circumstances:
- divorce
- marriage
- death of an owner
- financial hardship
- renunciation of citizenship
- medical reasons
You cannot decouple an existing HDB owned by 2 person.
But if you’re buying a new HDB, you can plan and buy in a “decoupled state” by having a sole owner + the other as merely occupier. This is aka owner-occupier scheme, whereby the occupier can’t finance the house with CPF.
For EC, decoupling is possible after the 5 years MOP.
How to decouple for private?
There are 2 ways:
- Gift if fully paid
- Part-purchase
It is easier to gift, as the banks are not involved. You can get a legal firm to do.
NOTE: A property that is gifted will have a dirty title for 3 years. This is because if the one who gives away is bankrupt, the OA can void the gift. As such, the property is not very marketable for 3 years.
To part-purchase, you will need the bank and conveyancing lawyers.
Planning for decoupling
When you part-purchase, you still need to pay BSD for the shares that you purchase. For a couple with a 50-50 tenancy-in-common arrangement, you will need to pay BSD for 50% of the purchase price (or valuation amount).
As such, a neat trick to pay lesser BSD is to start with a 99-1 split.