Investment 7 Ways To Avoid ABSD Legally In Singapore (Updated For 2022)

  • September 22, 2022
  • 10 min read
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Ryan J

Ryan is an old school print journalist gone digital. He's lived in almost every type of housing in Singapore, from flats to landed homes. Over the past 18 years, he's been a content developer for companies large and small, a co-founder in an education business, and sometimes a voice on the radio. He also spends too much time and money on painting little plastic soldiers.

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Baba boy
Baba boy

Hi, I am interested to learn more about your last method. What you are referring to is called the Owner-Essential Occupier Scheme. What do you think is the bare minimum income (or best combination for H&W) to get the best loan?

For an average 4k income on 1 person, HDB will only loan you about 50% LTV. So the alternative is the bank loan. Do you think an average 4k income on 1 person will be able to get a full LTV of 75% from the bank, despite the fact that both H&W are servicing the loan?

Stacked Homes
Stacked Homes

Hi Baba Boy, thanks for your question. For HDB loan, the LTV is 90% regardless if 1 person or 2 persons are servicing it. If 1 person is servicing the loan, then a lower cost HDB has to be purchased. All your CPF monies in your OA account will be used first. Beyond that, the Mortgage Servicing Ratio (MSR) of 30% must be met. This is the maximum proportion your monthly mortgage payment can be to your income. Going by that, someone earning $4K a month can have a maximum monthly mortgage payment of $1,200. For this amount in monthly… Read more »

Sharon
Sharon

Hi, would like to know, how to avoid ABSD, if I would like to purchase another resale private property . Currently, We own HDB n private condo.
Thanks

Stacked Homes
Stacked Homes

Hi Sharon, considering that you currently own an HDB, it would be quite difficult to avoid ABSD if you still want to purchase residential properties without using a Trust – this is because you cannot decouple an HDB. One option is to sell your HDB and decouple your private condo to free up one buyer to purchase another private property.

Gary
Gary

Hi, me (Singapore PR) & my wife (Singapore Citizen) would like to upgrade from HDB (fully paid mortgage with cash and CPF) to new private condo under construction, would like to know the best way to avoid paying ABSD.

Stacked Homes
Stacked Homes

Hey Gary! One way is to buy under a Trust. Without disposing the HDB, there’s no way to avoid the ABSD, even if you buy under your wife’s name as that only that incurs lesser ABSD but doesn’t eliminate it totally. Or sell the HDB and buy 99/1 matrimonial home which won’t incur the ABSD. Then the PR can buy over the share next time to free the other person from owning 1 property.

Weng
Weng

When PR buying over the shares, does he/she needs to pay 5% ABSD?

Stacked Homes
Stacked Homes

Hey there! Yes this is needed

Sophia
Sophia

Hi, regarding point number 1, what if I am selling my existing HDB and upgrading to a Resale EC, do I still need to pay ABSD?

Stacked Homes
Stacked Homes

Hey Sophia! Yes you’ll have to pay the ABSD. This only works for new ECs.

Howard
Howard

Hi Ryan, firstly what a great site you have. Data-driven, and always insightful.

Pardon my ‘dumb’ question

When Decoupling, eg. spouse buying over the 50% shares.

the BSD paid on the 50% share, is on the initial purchase value?

Or the existing market value? if it is the market value, how is it determined and who determines it? Is there a regulation to engage pre-approved valuers?

Howard
Howard

Hi there! would you be able to help me with my silly question please? Thanks.

Stacked Homes
Stacked Homes

Hey! Thanks for your question. Sorry for the late reply! Stamp duty is based on the purchase value or valuation (existing, not when it was bought) whichever is higher. Valuation is usually done by the bank.

Alvin
Alvin

Hi, great value from your articles as always. Is it possible to buy a resale HDB as a married couple to form a family nucleus, but list one of them as an Occupier? After fulfilling the MOP period of 5 years, the Occupier can then proceed to buy a Private Property without having to pay for ABSD?

Stacked Homes
Stacked Homes

Hi Alvin. Thank you for your kind words. Yes the situation you described is possible. You can list 1 as an occupier. This means that occupier is not a property owner, and thus won’t be subjected to the ABSD. You can use this method so that your spouse or anyone else in your family nucleus can go out and buy a property without being subjected to ABSD. The downside is that this person is not an owner, and therefore their CPF cannot be used towards paying the house loan, and they cannot take a loan out on the property since… Read more »

Mrs Tang
Mrs Tang

Hi Ryan! Was trying to find more about decoupling & found your article.

Currently we own a approx. S$2.5 mio house, fully paid up, no bank loan & monies returned to CPF. Thinking of getting another HDB / private property. What is the best way to avoid ABSD? Gift it to 21-year old child/ spouse? Transfer 50% to spouse? Appreciate your advice. Thanks Ryan!

Stacked Homes
Stacked Homes

Hi Mrs Tang, please note that our advice here is purely educational only – we would advise you seek a real estate agent/lawyer to assist you specific to your situation.

Since the house is fully paid up, decoupling is an option as this means the other spouse would not have to take on any loan.

This would free the other party up to purchase their 1st residential property.

Do note that buying HDBs are much harder as you can only buy under specific schemes, and if your partner already has a private residence, then it’s not possible to buy an HDB.

Ariel
Ariel

Hi Stacked/ Ryan, I have a question about the Single Owner-Essential Occupier scheme. I wasn’t a PR when we were married and purchased our resale HDB, so I was listed as Essential Occupier for the flat and my partner as the Owner. I’m a SG Citizen now but still listed as an Essential Occupier, and wondering if this means we could keep the HDB flat and I can buy a private property under my name without having to pay ABSD. I asked another agent before but was told that I can’t avoid ABSD even if I’m only an Essential Occupier,… Read more »

Stacked Homes
Stacked Homes

Hi Ariel, so long as you are not an owner, you do not have a property under your name. As such, the property count for you starts at 0, so there’s no ABSD if you go out and purchase your first property. We’ve spoken directly to IRAS directly on this matter before. Hope this clarifies!

Amber
Amber

My spouse and I own a resale HDB and interested to buy a 2nd private property for investment. HDB was not owned under Owner Essential Scheme. Can I now change to my husband as the owner and I as essential occupier so that we can buy the 2nd property under my name without paying ABSD?

Stacked Homes
Stacked Homes

Hey Amber, no this is not going to be allowed because it’s essentially just changing the ownership status so that you can free up one name to buy another property to avoid the ABSD. HDB knows about this tactic and many have tried. This loophole does not exist today so it cannot be done.

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