In view of the disruption to the property sector brought about by the Covid-19 outbreak and circuit breaker measures, the Singapore goverment announced on 6 May 2020 a series of temporary relief measures for individuals and property developers. Married couples, who intially had just six months to recoup a hefty 12% of Addtional Buyers’ Stamp Duty (ABSD), now have an additional six months to qualify for ABSD remission. (Developers also benefit too; we’ll talk about that later.)
Under the ABSD regime, a Singaporean married couple jointly purchasing a second residential property must initially pay ABSD even if they intend to sell their first home*. But if they manage to sell the first residential property within a specified timeline, they will be eligible for a refund of the ABSD paid on the new property. (To be eligible, at least one of the buyers must also be a Singapore citizen.)
* The first home does not need to be jointly owned.
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ABSD Remission: Temporary relief measures to the rescue
In normal circumstances, the specified timeline for sale of the first residential property is six months from the date of purchase of the second property if it is a completed property; or six months from the issue date of the TOP or CSC (whichever is earlier) if that property was not yet completed at the time of purchase (i.e. a new launch condo).
Under the Covid-19 temporary relief measures, the specified sale timeline for refund of ABSD paid on their second residential property for Singaporean married couples will be extended by six months. To qualify for this extension, the following two conditions must be met:
So, technically, a married couple who bought their second property between 1 August 2019 and 1 June 2020 can be eligible for the extended timeline for ABSD remission. The extension brings the duration of the specified sale timeline for the eligible property from six months to 12 months (i.e. one year).
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How does the extended ABSD remission period help buyers?
If an affected couple can’t sell their first home in time and get their refund for ABSD paid, they’ll have to bear a massive and unexpected loss of 12% of the purchase price of their second home. For a condo bought at $2.5 million, that works out to $300,000 lost.
The Covid-19 situation has severely disrupted property sales in a way that these married couples could never have anticipated when they bought their second property, so giving them more time to sell their first home in this challenging climate is an essential and much-needed move.
“Many married couples are worried about missing their sell-by deadlines,” said Stuart Chng, co-founder of Navis Living Group at OrangeTee.
Luckily, the Ministry of National Development (MND) recognised the concerns of this group. “Although we are just one month into the circuit breaker [which commenced on April 7], the MND has factored in additional buffer time and extended the [ABSD remission] qualifying period to those whose deadlines fell on the 1st of February and after,” he added.
“The extension should be great news for many couples who had failed to qualify for their ABSD refunds since February 2020, and gives affected couples a good chance to sell on time and get their money back once life resumes on 1st June,” said Stuart.
The extension for ABSD remission will also stabilise the resale property market. “Sellers can now have more breathing room to sell without feeling pressured to make a sale. So, along with the option to defer home loan repayments, the timeline extension for ABSD remission eases immediate sell-side pressures that could otherwise cause overall property prices to fall much faster,” Stuart explained.
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How to apply for the ABSD remission
If you qualify for the above conditions and other conditions under the ABSD remission for married couples, you may apply for the refund by sending an email to estamp@iras.gov.sg with the subject “Temporary Relief Measures for ABSD Spouses Remission – Insert Property Address”, containing the following declaration/documents:
a) Declaration that
i. On the date of purchase of the second residential property, each of the purchasers (i.e. the married couple) did not own interest in more than 2 residential properties,
ii. As at the date of sale of the first residential property,
• The couple remains married,
• There is no change of ownership in the second residential property at the time of sale of the first residential property, and
• The couple has not purchased or acquired any other residential property since the purchase of the second residential property;
• There is no change of ownership in the second residential property at the time of sale of the first residential property, and
• The couple has not purchased or acquired any other residential property since the purchase of the second residential property;
b) Confirmation if the second residential property is a completed or uncompleted property at the time of purchase. If it is an uncompleted property, please confirm the date of TOP or CSC (whichever is earlier) of the second residential property;
c) A copy of the contract/agreement for the purchase of the second residential property; and
d) A copy of the contract/agreement for the sale of the first residential property.
Any application for the refund of ABSD must be made within 6 months after the date of sale of the first residential property, which means if you bought your second property on 1 August 2019 and sell your first property on 1 June 2020, you have until 30 November to submit your application for ABSD remission.
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Wait, developers win too!
Developers, who are initially required to sell units within a five-year time frame or face hefty ABSD penalties and Qualifying Certificate (QC) charges, have also been feeling the squeeze from Covid-19 and the circuit breaker measures. Condo sales galleries, for instance, have essentially been locked down until 1 June.
Acknowledging their troubles, the government also announced the extension of the Project Completion Period (PCP) for property developers by six months. Residential developers also get a six month extension within their specified five-year window to sell all units before being subject to ABSD penalties and QC charges.
Do these measures mean that the property market is saved?
Through progressively introduced relief measures, the MND has certainly shown their commitment to protect homeowners and developers in Singapore from the more extreme effects of Covid-19 and circuit breaker measures. Even if the economy continues to take a hit, we believe the government has enough measures in place that they can implement/unwind to safeguard the collective wealth of the nation’s people and businesses.
Do you agree that the ABSD remission will help ease downward pressure on property prices? Share your thoughts with us in the comments section below.
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3 days ago · 6 min read · Source: 99.co (10 May 2020)
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