Top 5 Ways to Buy a Private Condo in Singapore Without Paying ABSD

Singapore’s property market is highly attractive, but the Additional Buyer’s Stamp Duty (ABSD) presents a major hurdle for those purchasing multiple properties. 

The hefty tax, which can go up to 20% for Singaporeans buying a second home, often discourages property investments. For foreigners, the tax is a lot higher since they are required to pay a 60% ABSD rate any residential property.

However, there are legal ways to purchase a condo in Singapore without paying ABSD. Understanding legal strategies to minimize or avoid ABSD can help investors and homeowners make smarter decisions. Here’s how you can do it:

Understanding ABSD Rules for Singapore Property Buyers

ABSD was introduced in 2011 by the Singapore government as a cooling measure to curb speculation and ensure a stable and sustainable property market. Here’s why it was implemented:

1. Prevent Property Speculation – Before ABSD, investors were flipping properties quickly for profit, driving up prices beyond affordability for genuine homebuyers.

2. Maintain Housing Affordability – Rising property prices made it harder for Singaporeans to own homes, so ABSD was introduced to moderate demand.

3. Stabilize the Market – By discouraging excessive investment from foreign buyers and multiple-property owners, ABSD helps prevent property bubbles.

4. Encourage Prudent Borrowing – Alongside other cooling measures (e.g., TDSR framework), ABSD ensures that buyers are financially prepared for property ownership.

5. Prioritize Housing for Singaporeans – Higher ABSD rates for foreigners and entities help keep homes more accessible for citizens.

Over the years, the ABSD rates have been adjusted to align with market conditions, most recently in April 2023, when the property market saw record breaking demand for property investors and foreigners.

Here’s the latest ABSD rate from 2023. Take note that ABSD rates shift according to supply and demand and will shift accordingly.

Legal Strategies to Avoid ABSD

As a property investor myself, I believe that investing in property is a great way to accumulate generational wealth 

1) Decoupling Property Ownership

Decoupling property ownership is a strategy where one co-owner of a jointly owned property transfers their share to the other owner. This allows the transferring owner to be removed from the property's ownership, freeing up their name to purchase another property as a first-time buyer—thereby avoiding the Additional Buyer’s Stamp Duty (ABSD) that applies to second and subsequent property purchases in Singapore.

Here’s how decoupling works:

1. Transfer of Ownership (Part-Sale Process)

One spouse sells their share of the property (e.g., 50%) to the other. This is a part sale rather than a gift, as Singapore law does not allow free property transfers between spouses unless in special cases like divorce or inheritance.

This method reduces Buyer’s Stamp Duty (BSD) costs compared to selling a 50% share and is commonly used by investors to expand their property portfolio. However, it requires mortgage refinancing, legal fees, and careful financial planning. Note that HDB flats are not eligible for this strategy.

The 99-1 rule is a property ownership strategy where one spouse holds 99% of a property, and the other holds 1%. When decoupling, the 1% owner sells their share to the 99% owner, allowing them to be removed from ownership. This enables the exiting spouse to buy another property as a first-time buyer, avoiding ABSD on the new purchase.

However, risks include higher mortgage burdens, legal fees, and stricter loan approvals. The government prevents tax avoidance by imposing higher stamp duties, monitoring transactions, tightening loan rules, and adjusting policies to close loopholes. Buyers should be cautious as increased IRAS scrutiny could lead to audits or penalties.

2. Payment of Stamp Duty

The buyer (remaining spouse) must pay Buyer’s Stamp Duty (BSD) on the transferred portion. The BSD is calculated as:

• 1% on the first $180,000

• 2% on the next $180,000

• 3% on the next $640,000

• 4% on the remaining amount

Unlike Additional Buyer’s Stamp Duty (ABSD), which can be as high as 20% for second properties, BSD is significantly lower, making decoupling a cost-effective strategy for property investors.

3. Mortgage and Financing Adjustments

If the property has an existing loan, the remaining spouse must take full responsibility for the mortgage. This requires either:

1. Refinancing the loan under their name alone.

2. Proving financial eligibility based on their income, credit score, and Total Debt Servicing Ratio (TDSR).

As such, buying a second property may require more financial backing to venture to second property. Here’s what you will need to consider:

• TDSR Limits: The new sole owner’s total loan commitments cannot exceed 55% of their gross monthly income.

• Loan Approval Challenges: If the remaining spouse’s income is insufficient, they may need to top up in cash or seek a lower loan quantum.

• Higher Interest Rates: Refinancing may lead to different loan terms, potentially increasing mortgage costs.

Before decoupling, couples should ensure the remaining spouse can qualify for the loan alone, or they may struggle to complete the transfer.

4. Completion of Transfer

Once the decoupling process is completed:

• The spouse who transferred their share no longer owns the property.

• Their name is removed from the property title and mortgage.

• They can now buy another property under their name as a first-time buyer—meaning they do not pay ABSD on the new purchase.

This allows couples to legally own two properties while avoiding ABSD, maximizing their property investment strategy. However, given the strict regulations and financial risks, seeking professional legal and financial advice is crucial before proceeding.

Costs Involved in Decoupling

While decoupling helps save on ABSD, it incurs other costs, including:

• Legal fees: $5,000 to $8,000 for both the buyer and seller

• Buyer’s Stamp Duty (BSD): Paid by the spouse who retains ownership

• Loan refinancing fees: If applicable, may include legal and administrative costs

• Valuation fees: Required to determine the market value of the transferred share

Who Should Consider Decoupling?

Decoupling is ideal for couples planning to invest in multiple properties while legally avoiding Additional Buyer’s Stamp Duty (ABSD). It is most suitable for those with strong individual financial capacity, as the remaining spouse must qualify for the mortgage alone after taking full ownership. 

Property investors also use this strategy to reduce tax liability while expanding their portfolio, but they must carefully assess financing risks and regulatory changes before proceeding.

Limitations & Risks

Decoupling is not allowed for HDB flats except in special cases like divorce or inheritance, making it viable only for private properties. 

A major challenge is the financial burden on the remaining spouse, who must qualify for the mortgage alone under strict bank assessments. Additionally, future tax policies may impose stricter regulations, potentially increasing stamp duties or closing loopholes, making decoupling a less cost-effective strategy over time.

2) Buying Under a Child’s Name

Buying property under a child’s name is a method some parents use to avoid Additional Buyer’s Stamp Duty (ABSD) when purchasing additional properties. Since a child is considered a first-time buyer, they are exempt from ABSD when purchasing their first property.

This strategy is commonly used by parents who already own one or more properties and wish to invest in another without incurring 20% or higher ABSD.

How Does It Work?

1. Eligibility – The child must be at least 21 years old, as this is the legal age to own property in Singapore.

2. Property Purchase – The property is registered under the child’s name as their first home, meaning ABSD does not apply.

3. Financing Considerations – Since most young adults have little to no income, parents often act as guarantors or co-borrowers for the housing loan. However, parents cannot be co-owners unless they already own no other property, or the ABSD will apply.

Why Do People Use This Strategy?

People use this strategy mainly to avoid high ABSD costs. For example, a second property worth $2 million would incur $400,000 in ABSD, but buying under a child’s name eliminates this expense. 

It’s also a way to build wealth for the next generation. Parents see it as an early inheritance, helping their child enter the property market sooner and benefit from future appreciation. However, this approach comes with risks, such as legal ownership issues and estate planning challenges.

Financial and Legal Implications

While this strategy seems beneficial, it comes with risks and challenges:

1. Loan and Financial Responsibility

Since most young adults have little to no income, securing a mortgage on their own can be challenging. To get loan approval, parents often act as guarantors or co-borrowers, making them financially responsible for the loan. 

However, this reduces their own borrowing capacity for future investments or property purchases. If the child is unable to keep up with mortgage payments, parents may have to step in to cover the costs, creating financial strain. 

Additionally, if parents face financial difficulties later, they may find it harder to obtain loans due to their existing commitments.

2. Legal Ownership and Future Planning

Once the property is registered under the child’s name, they have full legal control over it. Parents cannot sell, transfer, or refinance the property without the child’s consent, which could create complications if family dynamics change. 

If the child marries a foreigner, their spouse may have a legal claim to the property in case of a divorce, potentially leading to asset disputes. Parents also need to consider estate planning, as they may lose control over how the property is managed or inherited in the future.

3. Impact on Child’s Future Home Purchase

Owning a property early can limit the child’s housing options later. If they decide to buy another home in the future, it will be classified as their second property, making them liable for ABSD. This significantly increases their upfront costs and could reduce their ability to afford a new home. As a result, what initially seemed like a financial advantage may turn into a long-term limitation, affecting their ability to upgrade or invest in property later in life.

3) Using a Property Trust

In Singapore, foreigners and Singaporeans purchasing additional residential properties must pay ABSD. However, buying property under a trust for a child under 21 can avoid ABSD since the child is considered the legal owner. Here are some key considerations to take note:

1. Full Cash Payment Required – Banks typically do not offer loans for properties held in trust. Investors must pay the full purchase price upfront.

2. Legal and Compliance Factors – Setting up a trust involves legal documentation and compliance with Singapore’s property laws.

3. Control Over the Property – The trustee (usually a parent) manages the property until the child reaches adulthood and gains full ownership.

This method helps investors legally acquire property without paying ABSD, but it requires a significant amount of cash liquidity since financing options are limited.

4) Purchasing a Dual-Key Unit

A dual-key unit is a unique type of property designed to function as two separate living spaces within a single home. It typically consists of a main unit and a smaller sub-unit, both of which share a common main entrance but have their own private doors, ensuring separation and privacy. 

The main unit is usually larger, with full living amenities such as a kitchen, living room, and multiple bedrooms, while the sub-unit is often a compact studio or a one-bedroom space with its own kitchenette and bathroom. This layout is particularly attractive to homeowners who want to maximise space efficiency while maintaining flexibility in how the property is used.

One of the biggest advantages of purchasing a dual-key unit is that it allows buyers to legally own two separate living spaces while being classified as a single property. 

Since a dual-key unit is registered under a single title, it does not count as an additional property purchase. This means that a homeowner who lives in one part of the unit while renting out the other does not have to pay ABSD, making it a cost-effective strategy for property investment.

Beyond tax savings, dual-key units provide homeowners with an excellent opportunity to generate rental income. Many buyers choose this type of property so they can lease out the smaller unit while living in the main section, effectively using rental earnings to offset mortgage payments. 

This setup is particularly beneficial for those looking for an additional income stream without the financial burden of owning multiple properties. Some owners also prefer to use the sub-unit for family members, such as elderly parents or grown children, allowing for multi-generational living while still maintaining a degree of independence and privacy. Others may choose to use the extra space as a home office, a guest room, or even a short-term rental option if the development allows it.

While dual-key units offer significant advantages, there are some factors to consider. These units are generally priced higher than traditional apartments of the same size due to their unique layout and increased functionality. Additionally, they are not available in every development, as not all condominiums or executive condominiums offer this design. The sub-unit itself is often more compact, which may limit its appeal to certain tenants, particularly families who require more space.

Despite these considerations, dual-key units remain a popular choice among property buyers who want to enjoy the benefits of rental income and multi-functional living while avoiding ABSD. The flexibility they offer makes them an attractive investment, especially for those who want to balance affordability with potential financial gains. 

5) Buying Commercial Properties

In Singapore, ABSD applies only to residential property purchases, meaning that commercial properties such as shophouses, office spaces, and industrial units are exempt from this tax. This makes commercial real estate an attractive option for those who wish to invest in property without the additional financial burden imposed by ABSD.

Even high-net-worth individuals have recognized this advantage. Zhang Ying, the wife of Alibaba founder Jack Ma, reportedly invested in a prime commercial property in Singapore, leveraging the ABSD exemption to expand their real estate holdings without the hefty tax. This move highlights how savvy investors strategically navigate Singapore’s property market to optimize their investments.

Benefits of Buying Commercial Real Estate

One of the key advantages of investing in commercial properties is the potential for higher rental yields. Unlike residential units, which are often subject to rental market fluctuations and tenancy regulations, commercial properties tend to have longer lease terms, providing investors with more stable and predictable rental income. 

Businesses that lease commercial spaces, such as offices or retail units, often sign multi-year contracts, ensuring a steady stream of revenue for property owners. Additionally, rental yields for commercial spaces can be significantly higher than those of residential properties, especially in prime locations where demand for office or retail space is strong.

Another benefit of buying commercial properties is the relatively lower stamp duties involved. While residential property buyers are required to pay both Buyer’s Stamp Duty (BSD) and, in many cases, ABSD, commercial property buyers only need to pay BSD. 

This translates into substantial cost savings, particularly for high-value properties. Furthermore, unlike residential properties that are subject to strict cooling measures such as loan restrictions and seller stamp duties, commercial properties have fewer government-imposed limitations. Investors can therefore finance their purchases more flexibly and structure their investments in a way that maximizes returns.

Risk You Need to Watch Out

However, commercial property investment also comes with its own set of challenges. For one, financing a commercial property typically requires a higher upfront capital outlay compared to residential purchases. 

Another important consideration is the type of commercial property being purchased. Different categories—such as shophouses, office spaces, and industrial units—have varying levels of demand, tenant profiles, and regulatory requirements. 

Looking to Buy Another Residential Property?

Avoiding ABSD in Singapore requires strategic planning and awareness of legal loopholes. Whether through decoupling, purchasing under a family member’s name, or investing in commercial properties, buyers can minimize extra costs while growing their real estate portfolio. 

However, as the government tightens regulations and increases scrutiny on tax avoidance schemes—such as the 99-to-1 loophole (Straits Times)—investors must stay informed and seek professional advice to ensure compliance. By making well-informed decisions, property buyers can navigate Singapore’s evolving property market successfully.

Navigating Singapore’s property market and avoiding unnecessary ABSD costs requires expert guidance and strategic planning. At Amy Lim Group, we help property investors make informed decisions, ensuring compliance while maximizing investment potential.

If you’re considering decoupling, purchasing under a family member’s name, or other property investment strategies, let our team support you every step of the way. Contact us today to explore the best approach for your real estate goals!