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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 youโ€™re buying a new HDB, you can plan and buy in a โ€œdecoupled stateโ€ by having a sole owner + the other as merely occupier. This is aka owner-occupier scheme, whereby the occupier canโ€™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:

  1. Gift if fully paid
  2. 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.