Since the implementation of higher Additional Buyer’s Stamp Duty (ABSD) rates in Singapore, the approach to property ownership and investment evaluation has significantly altered. During the 1990s, Singaporean real estate investors skillfully navigated the market by leveraging rental income from one property to fund the purchase of another. How things have changed over the years.
In practice, the ABSD has become a substantial barrier that necessitates even the most discerning investors to reevaluate their strategies. This brief tutorial explains how to buy 2nd property in Singapore without ABSD.
Depending on your nationality, you might or might not be eligible for ABSD remission under free trade agreements. When they buy residential properties in Singapore, nationals or permanent residents of countries such as the United States, Norway, Iceland, and Liechtenstein pay the same ABSD residential rates as Singaporeans.
The principle of “National Treatment,” established under the Singapore-European Free Trade Agreement (EFTA), forms the basis for this privilege. Individuals in these countries who are citizens or permanent residents are eligible for ABSD remission under the relevant free trade agreements.
Individuals can buy a second commercial property in Singapore without paying Additional Buyer’s Stamp Duty (ABSD). ABSD rates do not apply to commercial properties. Due to their exemption from additional stamp duties, they constitute an attractive option for investors seeking to expand their property portfolios without incurring supplementary costs.
Compared with the conventional range of 2% to 3% commonly observed in the residential sector, commercial properties typically offer higher rental yields, averaging approximately 5%. Property in commercial investments offers financial benefits due to the potential for future development.
It is crucial to have a comprehensive understanding of the distinctive characteristics and inherent risks in commercial properties. To begin with, the cash outlay required to buy a commercial property is greater than for a residential property.
To exacerbate the situation, commercial properties require a full cash down payment, whereas residential properties may allow the use of CPF. GST, currently 8%, is definitely applicable to commercial properties. It is always required to pay the GST amount in cash.
Investing in commercial property can yield significant profits; however, it requires meticulous research and an in-depth understanding of Singapore’s commercial real estate market, which differs markedly from the residential sector.
