Additional buyer’s stamp duty (ABSD) of 35 per cent now will apply on any transfer of residential property into a living trust occurring on or after May 9, the Ministry of Finance (MOF) announced on Sunday (May 8).
ABSD will be payable even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust, MOF said in a media release late on Sunday.
An identifiable beneficial owner of a trust residential property is a person named as a beneficiary of the residential property in the trust deed or document and who, as a result of the trust, has beneficial ownership of the residential property that is not revocable, variable, or subject to any condition subsequent.
When a residential property is transferred into a living trust, buyer’s stamp duty (BSD) is now due.
Depending on the characteristics of the beneficial owners of the residential property transferred into the trust, ABSD may be due.
ABSD currently does not apply where the living trust is constructed in such a way that there is no traceable beneficial owner at the time the residential property is transferred into the trust, according to MOF.
“As a result of its periodic policy review, the Government will adopt ABSD (Trust) at a rate of 35 percent to address and close this gap,” the statement continued.
As ABSD aims to promote a “stable and sustainable residential property market”, it should apply to transfers of residential properties into all living trusts, it said.
This is regardless of whether there are identifiable beneficial owners of the residential properties transferred into such trusts, it added.
ABSD (Trust) is to be payable upfront, when the residential property is transferred into any living trust.
As a concession, a trustee may apply to the Inland Revenue Authority of Singapore (IRAS) for a refund of ABSD (Trust), provided that all beneficial owners of the residential property are identifiable individuals and that beneficial ownership of the residential property has vested in all of these beneficial owners at the time of property transfer into the trust.
In addition, the beneficial ownership cannot be varied or revoked, or be subject to any condition subsequent, under the terms of the trust, said MOF.
According to the ministry, the refund amount will be based on the difference between the ABSD (Trust) rate of 35% and the ABSD rate corresponding to the beneficial owner’s profile with the highest applicable ABSD rate.
“A refund application must be submitted to IRAS within six months of the instrument’s execution,” it stated, adding that more information may be found on the IRAS website.