Rise in ‘decoupling’ queries among joint home owners

Since additional property cooling measures kicked in this January, property agents and lawyers have reported a rise in ‘decoupling’ queries among joint home owners.

The process allows one couple to own two properties, without having to pay the higher additional buyer’s stamp duty (ABSD) of 7 per cent on a second property.

Joint-owners of a property could be a couple, or a group of siblings – and more of them have been looking into transferring their ownership to one sole owner.

This will allow an exiting party to be treated as a first-time buyer when purchasing a next property, thereby avoiding higher duties.

Propnex CEO Mohamed Ismail said: “We have been receiving a fair number of enquiries, and I’m not talking about 1, 2 but tens of enquiries on a daily basis (since January this year).

“Even the law firms – partners that we are working with – have reported an increased number of instances whereby people are going through the decoupling processes.

“But on the other hand, not everyone who goes through the decoupling process will be able to enjoy substantial savings.”

This is because when the remaining owner takes over the exiting owner’s share, the remaining owner will be subject to a stamp duty of 3 per cent.

The process of striking off the exiting owner’s name from the title deed will also incur legal costs.

So all in, the transfer of ownership could cost S$30,000 for a one million dollar property.

That’s why some lawyers say that beyond the flurry of enquiries, the actual number of such transactions has not spiked significantly.

Leong Pat Lynn, partner in Rodyk & Davidson’s Real Estate Practice Group, said: “The sole co-owner, the one that stays behind, will then have to relook at the loan, look at the viability of continuing the loan in his own name.

“And obviously, what he can get in terms of his loan, the tenure of the loan, the loan to value ratios – will all be based on current levels, rules that are more stringent than before (compared to) when they first bought the property.”

Real estate lawyers say there are also non-monetary considerations.

In the event of divorce, for example, the couple may need to have a trust deed in place to protect the exiting party’s share in the property.

Source : Channel NewsAsia – 21 Mar 2013

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