Gone are the days when a Singaporean couple could just do a decoupling on their existing HDB flat to avoid the Additional Buyer Stamp Duty (ABSD). If you have vaguely heard about HDB Decoupling, are interested to find out more or have the intention of doing it so that you pay lesser stamp duty in your next property purchase, unfortunately you are way too late.
Decoupling – The Transfer of Ownership
So, what is HDB decoupling? It is a process whereby one owner transfers the ownership of his HDB flat to the other co-owner through way of gift. By doing so, the owner who has his ownership removed from the HDB property is considered a first time residential property buyer and will no longer be subjected to a 7% ABSD for his second residential property purchase (for Singaporean).
Since 1st April 2016, transferring of HDB ownership via way of gift between spouses will no longer be approved by HDB. The transfer of ownership within a family is still possible, subject to approval by HDB based on specific eligibility criteria. Stated in the HDB infoweb, the 4 main types of transfer of flat ownership are as follows,
- Inclusion of owners
Eg : The owners adding the name of their son/daughter to the property.
- Withdrawal of owners
Eg : Son or daughter withdraw his or her ownership from the flat
- Substitution of owners
Eg : Changing of ownership from one son/daughter to another
- Outright transfer:
Eg : Parent transferring the ownership to the son/daughter.
Other than transferring by way of gift, a resale part-share can also be done between family members. By doing so, the remaining co-owner will buy over the share of the other co-owner at a mutually agreed price. Transfer of HDB flat ownership between spouses, be it via way of gift or resale part-share will only be workable in circumstances such as demise of an owner, divorce, financial hardship etc.
Previously, a lot of ‘smart’ buyers had managed to avoid the hefty additional buyer stamp duty by doing a HDB decoupling. By doing so, not only did the buyers save on their stamp duty, they also did not need to set aside a minimum sum in their CPF Special and/or Ordinary Account if they were free from any property ownership. In other words, more CPF and/or cash were available to finance their new purchase. Well, from the investor’s point of view, the new changes might seem to be bad news. Property investors who were planning to get a second property, would definitely give it a second thought.
But let’s look at it in a more neutral way. First of all, a subsidised HDB flat is sold at an affordable price and it is a privilege exclusively for Singaporean couples who have formed a family nucleus to set up their first home. It is subsidised as the government’s main objective is to build a home and shelter for Singaporeans. But if it is being used as a tool for investment, it’s not wrong for the government to impose a tax. And also, by withdrawing one of the names from the ownership, the interest of the exiting owner is no longer being protected since he has transferred his share to the other party via way of gift without any monetary consideration involved. Should the relationship between the married couple turn sour, things might get complicated as well.
Whatever it is, HDB decoupling between husband and wife is simply NOT possible anymore.
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