In The News

Cash-rich purchasers who have been avoiding extra buyer's stamp duty (ABSD) laws by purchasing residential properties through revocable or conditional trusts may no longer be allowed to do so. This follows the implementation of a new rule on Monday (May 9) that imposes a 35% ABSD on residential property transfers into living trusts.

When a residential property is transferred into a living trust, buyer's stamp duty is due under existing legislation. ABSD may also be due, depending on the profile of the property's beneficial owner. When there was no known beneficial owner when the property was transferred before, ABSD did not apply.

The Ministry of Finance (MOF) said that starting of May 9, ABSD (Trust) is payable even if there is no traceable beneficial owner. Furthermore, equity interests in residential property holding corporations that are transferred into living trusts on or after May 10 will be subject to additional conveyance duties (ACD Trust), even if there is no traceable beneficial owner, according to the MOF.

Nonetheless, the new rule is unlikely to have a big impact on the market because properties bought under a trust must be funded only with cash, and most people cannot afford to do this, OrangeTee & Tie chief executive Steven Tan said.