Decoupling Property To Invest a Second Property – Will It Benefit You?

Updated: Nov 17




I am a Real Estate Professional since 1995.

Helping a lot of people to build their wealth through property investment.

Property investment is not only talking about buying and selling.

It needs to have a strategically planning according to an individual profile.


Every case is unique, I have to understand each individual before I can come up with a road map for my client.


"Decoupling", this term now is not a stranger term in Singapore Real Estate Industry.


Many property agents have been giving advice to buyers to "decouple" their existing joint purchase property to free up the other person to avoid the ABSD for 2nd properties.


Especially now when the ABSD for the 2nd property increased from 12% to 17% on 16th December 2021.



Buyer profile

​ABSD rates from 6 July 2018 to 15 Dec 2021

​ABSD rates on or after 16 Dec 2021

Singapore Citizens (SC) buying 1st residential property

Not applicable

​Not applicable

SC buying third and subsequent residential property

​12%

​17%

SC buying third and subsequent residential property

​15%

​25%

​Singapore Permanent Residents (SPR) buying first residential property

​5%

​5%

​SPR buying second residential property

​15%

​25%

​SPR buying third and subsequent residential property

​15%

​30%

​Foreigners (FR) buying any residential property

​20%

30%​

​Entities buying any residential property

​25%

​30%

​Housing Developers buying any residential property1

25%

(Plus Additional 5% (non-remittable)

​35%

(Plus Additional 5% (non-remittable)

Trustee buying any residential property

​35%



Why is this happening?


It all arises due to the cooling measures by the government. Especially the last cooling measures take effect on 6th July 2018. The ABSD for a 2nd property increased to 12% compared to the 7% before the adjustment to Singapore Citizens and now a further increase in the ABSD from 12% to 17% with effect from 9th May 2022.



So, What is "Decoupling"?

I believe many people do not understand how the "Decoupling" process works, how long will be the process and what the costs involved.


In Singapore, the term "Decoupling" in a real estate context refers to the property jointly owned by a couple, freeing up one person going through a sell and purchase process, and the other person taking full ownership of the existing co-own property.


The whole process involved two property transactions process. One is the selling process, and the other is the buying process on the same property.


The following example will explain the "Decoupling" process.


Mr and Mrs Tan jointly owned one private residential property. They decided to do a "Decoupling" to this property to remove Mrs Tan from the ownership of this current property. After freeing Mrs Tan from the existing property, she will be able to buy another property without paying full ABSD since she does not own any property.


The "Decoupling" process will have 2 parts, the Selling Process and The Buying Process.


In the Selling process, Mrs Tan

The current property is owned by Mr and Mrs Tan, under the joint tenancy scheme. Mrs Tan will be selling her share of the property to Mr Tan. Since it is under joint tenancy, by default, Mr.s Tan owns 50% of the share.


To ascertain the current property's value, Mr and Mrs Tan will have to get a valuer to value the property.


The value of the property determined by the valuer will be the price for Mrs Tan to sell her share to Mr Tan. Should the property be purchased lesser than three years, Mrs Tan would be liable for SSD (Seller Stamp Duty), in a pro-rated as follow.



Holding Period

SSD Rate (on the actual price or market value, whichever is higher)

Up to 1 year

12%

​More than 1 year and up to 2 years

​8%

​More than 2 years and up to 3 years

​4%

​More than 3 years

​No SSD payable



The Purchasing Processes, Mr Tan

Mr Tan will be purchasing the 50% share from Mrs Tan. He needs to pay the Normal buyer stamp duty for the value of the share.


The whole process takes around eight weeks to complete.

They have to engage a lawyer to manage these two transactions.



Now we come to the costs involved in "Decoupling".


Below are the basic costs involved in Property Decoupling

1. The lawyer fees.

2. The valuation fees

3. Bank administration fees (if early termination of mortgage loan contract)

4. Normal Buyer Stamp Duty

5. Seller stamp duty (If property purchase is less than three years)


Decoupling - Is it beneficial to you to purchase your next property?

The only reason for "decoupling" is to free up one person from a joint ownership property, so as to avoid paying ABSD when he or she bought another property.


But is Decoupling really benefit you?

In simple, you might not be benefiting from buying the second property after "Decoupling". The reason is that there are too many areas to look into it.

Do not dive into the process because you heard from someone that this allows you to avoid ABSD when purchasing a second property, ( I would like to clarify, you can't avoid paying ABSD for a second property)


After the last adjustment of the ABSD, now it makes more sense for "decoupling" to purchase another property for investment.



"Decoupling" is to free up a person from a co-own property so the free person can buy another property solely in his/her name and this is his/her first property. She/He only needs to pay the Buyer Stamp Duty. For Singapore citizens, the first property does not have ABSD, but for Singapore Permanent Residents, on top of the Normal Buyer Stamp duty, they have to pay a 5% ABSD.




Let me share some of the possible scenarios.