What Is Decoupling and How Can It Help You in Buying a Second Property?

Buying a second property may be a dream come true to many but, in Singapore, it also means having to pay the hefty Additional Buyer’s Stamp Duty (ABSD).

The ABSD for Singapore Citizens buying a second property is 17% of the purchase price, or the current market value of the property, whichever is higher. It is 25% for Singapore Permanent Residents and 30% for foreigners.

The property tax was introduced by the government to cool a heated market, similar to other property cooling measures such as the Seller Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR).

However, many married couples in Singapore have found a way to buy a second home without having to pay the ABSD – in a process called decoupling.

What is decoupling?

Joint homeowners can “decouple” when one co-owner transfers his/her share to the other, relinquishing his/her ownership completely. Now, this owner will be treated as a first-timer, as if he/she has not bought or owned a property before. Meaning, he/she can buy a second property without incurring any ABSD.

Take this for example: If you decide to buy a $1m second property for investment without decoupling, you will have to pay an ABSD of at least $170,000 (assuming you’re a citizen buying a second property). But by decoupling, you can save the amount and use it for other home-related purchases such as home renovation and/or furnishings.

Property TaxWhat you pay if you don’t decouple
What you pay if you decouple
Additional Buyer’s Stamp Duty (ABSD)$170,000N/A
Buyer Stamp Duty (BSD)$24,600$24,600

Please note that the calculation only illustrates the cost of the ABSD and does not include other costs, such as outstanding home loans and the Central Provident Fund (CPF) monies to be returned. We have added a more detailed decoupling scenario at the end of this article.

Sounds good, right? Unfortunately, it is not suitable for everyone.

Some headwind for HDB owners thinking about decoupling

HDB flat owners have not been allowed to transfer their ownership to a family member since 2016. Decoupling is only allowed under these six circumstances:

  1. Marriage
  2. Divorce
  3. Death of an owner
  4. Financial complications
  5. Renunciation of citizenship
  6. Medical reasons

In most scenarios, decoupling will only be possible for private properties.

How can private homeowners decouple their property?

There are two ways for private homeowners to practice decoupling: by way of sale (part purchase) and through a transfer as a gift.

1. Transfer by way of sale (part purchase)

This process involves one party legally buying all the remaining shares of the property from his/her spouse. All the terms of the contract would need to be spelt out in the sale and purchase (S&P) agreement and is usually drafted by a lawyer or conveyancer.

To complete the transaction, the buyer would have to pay the seller for his/her rights to the property, as stated in the S&P agreement, and the BSD to the Inland Revenue Authority of Singapore.

Buyer Stamp Duty (BSD) with effect from (wef) 20 Feb 2018

Payment Schedule
% of Stamp Duty
First $180,0001%
Next $180,0002%
Next $640,0003%
Remaining Amount4%

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