What is the Duty that I need to pay as a Seller disposing of equity interests in Property-Holding Entities (PHEs)?
The Additional Conveyance Duties for Sellers (ACDS) will apply on qualifying disposal of equity interests in the PHE (“Target”) based on the market value of the underlying residential property.
Additional Conveyance Duties for Sellers (ACDS) Rates
| (A) If the Target is a Type 1 PHE | ||
|---|---|---|
Market value of the underlying residential property owned by the Target | ACDS | |
| 12% and/or 16% (as applicable) on the entire value | (i) 12% x U1/V x W where U1 comprises equity interests acquired by the grantor between 11 March 2017 and 3 July 2025 (both dates inclusive) (called pre-4 July 2025 equity interests), and the conveyance is executed within the holding period of 3 years from the date such equity interests were acquired; (ii) 16% x U1/V x W where U1 comprises equity interests acquired by the grantor on or after 4 July 2025 (called post-4 July 2025 equity interests), and the conveyance is executed within the holding period of 4 years from the date such equity interests were acquired; or (iii) The sum of the amounts in (i) and (ii) where U1 comprises both pre-4 July 2025 and post-4 July 2025 equity interests, and the conveyance is executed within the respective holding periods mentioned in paragraphs (i) and (ii).
| |
| (B) If the Target is a Type 2 PHE | ||
Market value of the underlying residential property owned by the Target | ACDS | |
| 12% and/or 16% (as applicable) on the entire value |
| |
Note: The above table is a simplified version. For the full version and the terms used, please refer to IRAS e-Tax Guide on Stamp Duty: Additional Conveyance Duties (ACD) On Residential Property-Holding Entities (PDF, 841KB).
An illustration: How does ACDS work?
Direct sale/transfer of equity interests in PHE
Mr W owns 80% equity interest in Company B which owns 90% equity interest in Company A. Company A directly owns a prescribed immovable property valued at $8M and it total tangible assets is $10M. Company B’s total tangible assets is $2M. Mr W had previously acquired 40% equity interest in Company B on 1 Jan 2011, 10% on 1 Apr 2017, 20% on 1 Jan 2019 and 10% on 1 Aug 2025.
Mr W sold his 60% equity interest in Company B on 1 Jan 2021 to his friend, Mr V, and the remaining 20% on 1 Feb 2026.
STEP 1: Determine if the target is a PHE
Asset percentage for Company A = $8M/$10M = 80%
Company A is a Type 1 PHE as 80% of its total tangible assets is prescribed immovable property
Asset percentage for Company B = $8M x 90% / [$2M + ($10M x 90%)] = 65%
Company B is a Type 2 PHE.
STEP 2: Determine the seller’s associates
Mr W is not associated to the other equity-holders in Company B. We will only look at the 80% equity interest belonging to Mr W.
STEP 3: Determine if the seller is a significant owner
Mr W is a significant owner as he owns 80% in Company B, which is above the 50% significant ownership threshold.
STEP 4: Compute the ACDS payable
Assuming that the prescribed immovable property is a part of an entire building used for residential purposes and the value of it is $8M,
- For the 60% disposal on 1 Jan 2021: ACDS at 12% x 10%* x $8M x 90%
- For the 20% disposal on 1 Feb 2026: ACDS at 16% x 10%^ x $8M x 90%
*ACDS does not apply to the 40% equity interest acquired on 1 Jan 2011 as it was acquired before 11 Mar 2017, and the 10% equity interest acquired on 1 Apr 2017 as it was acquired more than 3 years ago from the date of sale.
^ACDS does not apply to the other 10% equity interest acquired on 1 Jan 2019 as it was acquired more than 3 years ago from the date of sale.
For more information on examples and computation, please refer to IRAS e-Tax Guide on Stamp Duty: Additional Conveyance Duties (ACD) On Residential Property-Holding Entities (PDF, 841KB).
Sale of equity interest in trust by trustee
A. Where the beneficiary is a bare trust beneficiary
Mr Y is a trustee of Trust X, which holds 80% equity interest in Company D on trust for Mr Z who has beneficial ownership of the equity interest.
Company D owns 90% equity interest in Company C. Company C directly owns a prescribed immovable property valued at $8M and its total tangible assets is $10M. Company D’s total tangible assets is $2M. Trust X had previously acquired 40% equity interest in Company D on 1 Jan 2011 and 10% on 1 Apr 2017. It acquired a further 30% equity interest on 1 Jul 2022.
Mr Y, in his capacity as trustee of Trust X, sold the 80% equity interest in Company D on 31 Dec 2022.
STEP 1: Determine if the target is a PHE
Asset percentage for Company C = $8M/$10M = 80%
Company C is a Type 1 PHE as 80% of its total tangible assets is prescribed immovable property
Asset percentage for Company D = $8M x 90% / [$2M + ($10M x 90%)] = 65%
Company D is a Type 2 PHE.
STEP 2: Determine the beneficial owner’s associates
Mr Z is not associated to the other equity-holders in Company D. We will only look at the 80% equity interest beneficially owned by Mr Z.
STEP 3: Determine if the beneficial owner is a significant owner
The beneficial owner, Mr Z, is a significant owner as he has beneficial ownership of 80% equity interests in Company D, which is above the 50% significant ownership threshold.
STEP 4: Compute the ACDS payable
Assuming that the prescribed immovable property is a part of an entire building used for residential purposes and the value of it is $8M,
- Mr Z: ACDS at 12% x 30%* x $8M x 90%
*ACDS does not apply to the other 50% equity interest as 40% was acquired before 11 Mar 2017 and 10% was acquired more than 3 years ago from the date of sale.
B. Where there is no beneficiary who is identifiable or who has beneficial ownership of the equity interests in the trust
Mr J is a trustee of Trust T, which holds 80% equity interest in Company F on trust for Mr K and Mr L. As the trustee, Mr J has the discretion to decide whether Mr K and Mr L will receive any part of the equity interest, and in what proportion, i.e. Mr K and Mr L are non-bare trust beneficiaries.
Company F owns 90% equity interest in Company E. Company E directly owns a prescribed immovable property valued at $8M and its total tangible assets is $10M. Company F’s total tangible assets is $2M. Trust T had previously acquired 40% equity interest in Company F on 1 Jan 2011, 10% on 1 Apr 2017 and 30% on 1 Jul 2022.
Mr J, in his capacity as trustee of Trust T, sold the 80% equity interest in Company F on 31 Dec 2022.
STEP 1: Determine if the target is a PHE
Asset percentage for Company E = $8M/$10M = 80%
Company E is a Type 1 PHE as 80% of its total tangible assets is prescribed immovable property
Asset percentage for Company F = $8M x 90% / [$2M + ($10M x 90%)] = 65%
Company F is a Type 2 PHE.
STEP 2: Determine the trustee’s associates
As there is no beneficial owner, the trustee (and his associates) will be looked to in determining if the significant owner threshold has been met.
The trustee’s associates are the non-bare trust beneficiaries, Mr K and Mr L. Both do not own any equity interest in Company F in their own name.
STEP 3: Determine if the trustee is a significant owner
The trustee is a significant owner as the trust owns 80% in Company F, which is above the 50% significant ownership threshold.
STEP 4: Compute the ACDS payable
Assuming that the prescribed immovable property is a part of an entire building used for residential purposes and the value of it is $8M,
- Trustee (Mr J): ACDS at 12% x 30%* x $8M x 90%
*ACDS does not apply to the other 50% equity interest as 40% was acquired before 11 Mar 2017 and 10% was acquired more than 3 years ago from the date of sale.