The introduction of increased Additional Buyer’s Stamp Duty (ABSD) rates in Singapore has immensely changed the calculus of property investment and ownership. Long gone are the days of the 1990s when Singapore’s property investor s navigated the market with sheer ease, leveraging rental income from one property to finance the acquisition of the next.
Actually, the ABSD has emerged as a formidable barrier, challenging even the most astute investors to rethink their strategies. In this simple guide, we will help you learn more on how to buy 2nd property in Singapore without ABSD.
National or Permanent Resident under the Free Trade Agreements (FTAS)
Depending on your nationality, you might be exempt from or eligible for remission of ABSD under FTAs. Nationals or Permanent Residents of countries such as Iceland, Liechtenstein, Norway, Switzerland and the US enjoy the same ABSD rates as Singaporeans when buying residential properties in Singapore.
This privilege emanates from the ‘National Treatment’ obligation outlined in the Singaporean-European Free Trade Association (ESFTA) agreement. Nationals and Permanent Residents of these countries are eligible for ABSD remission under the respective FTAs.
Explore Investment in Industrial and Commercial Properties
Investing in commercial properties in Singapore offers a compelling strategy on How to buy 2nd property in Singapore without ABSD. And this is easily explainable considering commercial properties are not subject to ABSD rates. This exemption makes them an attractive option for investors looking to expand their property portfolio without the need for additional stamp duties.
Remember, commercial properties yield higher rentals, averaging around 5%, compared to the 2% to 3% typically applicable in the residential sector. This potential for increased income can make commercial property investments financially rewarding.
But it is important to have a clear insight into the unique traits and risks associated with commercial properties. For starters, commercial properties generally have a higher price tag than residential properties, necessitating more substantial cash outlays.
Not to mention, the downpayment for commercial properties must be made entirely in cash, unlike residential properties when you can use CPF. Of course, commercial properties are subject to Goods and Services Tax (GST), currently at 8%. You must pay the GST charge in cash.
Even though commercial property investments can be lucrative, the call for thorough research and a deep understanding of the commercial real estate landscape, which differs immensely from residential property in Singapore.
