Kamis, 18 April 2013

ABSD Relief: A case of "Animal Farm" revisited?

This may be old news to some but the wife and I just realised that SINGLE person who buys a home to live in will be hit with the additional buyer's stamp duty (ABSD) if he does not dispose of his existing residence first.

That means a single person might have to find accommodation in between selling the old home and completing the purchase of the new one.

The clarification apparently came from the Ministry of Finance (MOF) on March 28th (not an excuse here but we were on vacation that week so that might explain the oversight), following uncertainty over whether stamp duty concessions for married people would also apply to singles ("No stamp duty relief for singles switching homes"; ST Forum, March 30)

Some married couples will get a refund of the ABSD if they dispose of their first property within six months of buying a resale home or the completion of an uncompleted one.

This relief is provided for joint purchases by married couples with at least one Singaporean spouse. Both parties must also not own any other property at the time of purchase to qualify.

But these do not extend to singles. This means singles will have to sell their existing home first before buying another - even if the new unit is meant for occupation and not investment. And if they do not comply with this rule, they will be hit with a hefty additional tax in the form of the ABSD.

The rule could mean much inconvenience, with single people having to find a rented place for the short term, bunk in with a family member temporarily or secure an extension of stay with the buyer between the transactions.

The new levy was part of the seventh and most extensive set of property cooling measures that were unveiled in January.

These slapped a 7% ABSD on Singaporeans buying their second home.

A spokesman from the MOF said that the Government raised the ABSD rates to moderate demand for properties and help cool the market. It limited ABSD concessions to a narrow group of buyers, namely Singaporean married couples, to help them acquire and upgrade their matrimonial homes. So if more groups, such as singles, were able to qualify for ABSD concessions, it would defeat the purpose of the cooling measures.

But some experts disagreed with the policy, noting that all Singaporeans should be treated equally, regardless of their marital status. They felt that singles should not be penalised as long as they will own just one house eventually. The ABSD relief offered to married couples should be extended to them as well, as long as they commit to selling their current home within six months of the purchase.

The Government's measure has prompted Ms Karen Yip to raise the question of whether there is a proven correlation between one's marital status and the runaway prices in the property market, or has the original cooling objective of the ABSD bifurcated into one that attempts to address demographic anomalies as well. She felt that such measure, as it stands, is not only unfair but also diminishes the value of Singapore citizenship for singles. After all, they also contribute to nation building and pay as much tax as married citizens, if not more. ("Stamp duty refund: Shed light on singles' exclusion"; ST Forum, April 19).

Maybe it's time for MOF to step onto the plate (again) and better explain the rationale for denying singles the ABSD remission?

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