Continuing on the 6 part series of myth-busting, today we shall take a look at another common myth "ABSD is not worth paying".
Let us first understand the meaning of ABSD or Additional Buyer's Stamp Duty.
BSD vs ABSD
Buyer's Stamp Duty (BSD)
Tax paid on the acceptance of Option to Purchase (OTP) / Sale & Purchase Agreements (S&P). These are documents (i.e. OTP or S&P) that are prepared and signed when you buy or sell your property. Stamp Duty is payable on the actual price or market price whichever is higher. The buyer is responsible for paying Buyer’s Stamp Duty. Where Seller’s Stamp Duty is applicable, the seller is responsible for paying Seller’s Stamp Duty.
Additional Buyer's Stamp Duty
First introduced on 7 December 2011 to cool the residential market and recently on 5 Jul 2018, ABSD rates were revised due to the further acceleration in the escalation of the price of the residential properties.
ABSD is to be paid by certain groups of people who buy or acquire residential properties (including residential land) on top of the existing buyer’s stamp duty (BSD), is applicable as follows:
So now that you know you have to pay additional tax for owning more than one property, you might be thinking "Is it still worth it to pay more tax for owning more properties?"
You might remember this article in the Business Times. A report done by Morgan Stanley (12 April 2017) looked into the prospects for paying ABSD.
Can you still get a good return after paying ABSD
From the above graphs, we can see that the private property market moves in cycles, in a general upwards trend. Each time the market booms, the price increase is significantly more than when the market sinks.
Imagine buying a property during the low of 2009, even if you had to pay a 18% (ABSD + BSD) tax, you would have still made a handsome profit of 30%~40%.
What else can get you a potential capital gain of 30%~40% safely?
In actual fact, there has been strong demand from foreign investors who have been buying Singapore properties. Why? Because we have one of the lowest home price to income ratios among global cities.
Furthermore, Singapore is one of the few rare countries that have a favourable tax environment for investors, especially since we do not have a capital gains tax on the profits through property transactions.
Australia: - Capital Gain Tax (32.5%~45%)
- Rental income Tax (32.5%~45%)
- Land Tax (varies between states)
United Kingdom: - Capital Gain Tax (18%~28%)
- Rental income Tax (20%)
- Inheritance Tax (40%)
- ABSD (12%)
Hong Kong: - Capital Gain Tax (18%~28%)
- Rental income Tax (15%)
- Property Holding Tax (10%~20%)
- BSD (15%) + ABSD (15%) = (30%)
These are only 3 countries out of the many which are popular among property investors. If you were an investor today, and had money to invest in a property, which country would you put your money in today? If you had the proper knowledge, you'll definitely choose Singapore as one of your TOP picks.
Now with the data and facts presented to you, do you want to pay ABSD? It is clear that in the future to come, the potential gain is huge!
We have compiled a report with more detailed information from our extensive research. And this privileged information is what we share with our clients fully!
So what are you going to do today? What changes are you going to take to help yourself and your family for the future?
If you are still lost or unsure, I invite you to contact us today for a free discussion and analysis. We have helped many clients to create a clear strategy plan for their future housing needs. LET US HELP YOU BE THE NEXT SUCCESS STORY!
Many Thanks Teoduoproperty
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