23 Mar 2012
We refer to Mr Leow Zi Xiang’s letter ‘An incongruity in the Additional Buyer’s Stamp Duty (ABSD) regime’ (14 Mar 2012).
Mr Leow commented that while a citizen A who owned, whether partially or wholly, two or more homes should pay ABSD on the purchase of the next property, it would be incongruous for Citizen B who owned three residential properties jointly with, say, her mother to pay ABSD on the purchase of her mother's share of one of the properties.
We wish to clarify that an acquisition of a fractional interest or share in a residential property is included as a count of properties for the purposes of ABSD to ensure parity in tax treatment.
Levying ABSD for acquisition of fractional interest ensures that a citizen who partially owns a third property is not in a more advantageous position than another citizen who pays ABSD on his purchase of interest in a third property. Exempting citizen B from ABSD on the acquisition of additional interest in the third property may lead to a disparity in tax treatment. To illustrate, citizen A could purchase a partial interest, say 5%, in a third property, pays ABSD on that purchase, and then purchase the rest of the interest (95%) in the same property ABSD-free.
We also wish to clarify that a citizen owning up to two properties may purchase further interest in the same two properties without attracting ABSD. The cut-off at two properties for non-application of ABSD strikes a balance between facilitating citizens to purchase properties for occupation purposes versus targeting ABSD at purchase of properties for investment purpose.
We thank Mr Leow for the opportunity to clarify.
Claire Chua (Mrs)
Director (Corporate Communications)
Inland Revenue Authority of Singapore