3 ABSD Myths That Have Landed Singapore Buyers in Trouble

"I can put the property under my child's name to avoid ABSD."

This is perhaps the most common ABSD myth in Singapore. The logic seems simple: if a parent owns one property and wants to buy another without paying 20% ABSD, why not buy the second property in the name of an adult child who owns nothing?

The problem is that IRAS has the power to look through arrangements it considers to be tax avoidance under the Stamp Duties Act. If IRAS determines that a property was placed in a child's name primarily to avoid ABSD - with the parent retaining effective control or beneficial interest - it can impose the full ABSD on the transaction, plus a 50% surcharge on top of that amount.

Additionally, once the property is legally in the child's name, it is legally the child's property. Parents have lost significant assets when adult children divorced, faced bankruptcy, or simply chose not to transfer the property back. The legal exposure is real and the tax savings are illusory.

"The 99-to-1 split lets us legally avoid ABSD."

The 99-to-1 arrangement became popular among married couples and investors as a way to reduce ABSD exposure. The structure involves two buyers splitting ownership of a property as 99% and 1% - with the 1% owner intending to transfer their share back to the 99% owner shortly after purchase, theoretically allowing the 99% buyer to have effectively purchased the property without triggering ABSD as a second purchase.

IRAS has explicitly identified and moved against this arrangement. In its public guidance, IRAS stated that it has the power to disregard such arrangements and impose the full ABSD rate on the entire transaction. Several buyers who attempted this have faced full ABSD bills plus the 50% anti-avoidance surcharge.

The arrangement was never a legal loophole - it was always a tax avoidance scheme that IRAS chose to enforce against once it became widespread. The government made clear in 2023 that it takes a firm view on such arrangements, and enforcement has continued.

"I've already sold my first property, so my next purchase counts as a first purchase with no ABSD."

This is the most common misunderstanding among HDB upgraders. Many Singaporeans assume that once they sell their HDB flat and the sale is completed, they become first-time buyers again and their next purchase carries zero ABSD.

The reality is more nuanced and the timing is critical. If you purchase a private property before your HDB sale is legally completed - meaning before the Option to Purchase for your HDB has been exercised by your buyer - your private property purchase counts as a second property and attracts 20% ABSD.

The safe approach for HDB upgraders is to ensure your HDB OTP has been exercised before you exercise the OTP on your private property. At that point, you are considered to not own any property, and your private property purchase is your first - with zero ABSD.

This timing issue has caught many buyers off guard, particularly those who were keen to secure a unit at a new launch and signed the booking form before their HDB buyer had exercised the OTP. The result: a 20% ABSD bill on their new property that they had not budgeted for.