Additional buyer’s stamp duty (ABSD) of 35 per cent will apply on any transfer of residential property into a living trust occurring from 9 May 2022 according to the Ministry of Finance (MOF).

The announcement from MOF was released on late Sunday night and will take immediate effect on the following day.

Prior to this change, where the living trust is structured such that there is no identifiable beneficial owner at the time when the residential property is transferred into the trust, ABSD currently does not apply. Only buyer’s stamp duty (BSD) is payable when a residential property is transferred into a living trust. 

With effective from 9 May 2022, 35% ABSD will be payable upfront even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust. 

ABSD aims to promote a "stable and sustainable residential property market", it should apply to transfers of residential properties into all living trusts, MOF said. 

As a concession, a trustee may apply to IRAS for a refund of ABSD (Trust), provided that the following conditions are met: 

a) All beneficial owners of the residential property are identifiable individuals;

b) Beneficial ownership of the residential property has vested in all of these beneficial owners at the time of property transfer into the trust; and

c) The beneficial ownership cannot be varied or revoked, or be subject to any condition subsequent, under the terms of the trust. 

The refund amount will be based on the difference between the ABSD (Trust) rate of 35% and the ABSD rate corresponding to the profile of the beneficial owner with the highest applicable ABSD rate. The application for the refund must be made to IRAS within six months after the instrument is executed.

The overwhelming new property launches might be a result of buyers and investors making purchases via trusts and avoid paying ABSD. 

This 35 per cent ABSD payable on trust is is part of the ABSD regime. It arose from Singapore Government's periodic policy review to address and close this loophole.

Case Study

I plan to buy a freehold two-bedrooms condo at a new launch project for $2,000,000 under trust for my child who is currently 10 years old and his interest in the private property will only be benefically vested at the age of 21 years old. Can I apply for ABSD remission from IRAS?

No. The remission condition is based on vested benefical ownership at the time the residential property is transferred into the trust. Deferred benefical ownership that would only vest in the future do not meet the condition for ABSD (trust) remission. 

How much cash must I set aside for buying a residential property of $2,000,000 under trust for my child?

Parents must pay in full cash if they wish to use trusts to buy a house for their child who is a minor. Banks and financial institutions will not extend a home loan for this scenario. 

In addition, you must pay IRAS a sum of $64,600 for buyer stamp duty (BSD) and $700,000 for additional buyer stamp duty (ABSD) in a living trust.