ABSD of 35% to apply trust : With effect from May 9 2022, there will be a new “Additional buyer’s stamp duty” of 35% to apply on any transfer of residential property into living trust.
ABSD will be payable even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust.
An identifiable beneficial owner of a trust residential property refers to a person identified in the trust deed or document as a beneficiary of the residential property and who, because of the trust, has beneficial ownership of the residential property that is not, under the terms of the trust, revocable, variable, or subject to any condition subsequent.
ABSD of 35% to apply trust : Current Situation for Trust
Currently, thr buyer’s stamp duty (BSD) is payable when a residential property is transferred into a living trust.
ABSD may also be payable, depending on the profile of the beneficial owners of the residential property transferred into the trust. For example, a child already having one property in trust will incur ABSD if another property trust is transferred to him.
However, ABSD does not apply where the living trust is structured such that there is no identifiable beneficial owner at the time when the residential property is transferred into the trust. This was a rather smart way of doing a trust.
ABSD of 35% to apply trust : New Situation for Trust
Because of the inconsistent way, the new ruling is that ABSD of 35% should apply to transfers of residential properties into all living trusts.
This is regardless of whether there are identifiable beneficial owners of the residential properties transferred into such trusts.
A new name is given to this ABSD. It is known as ABSD (Trust).
When do you pay ABSD (Trust)
ABSD (Trust) is to be payable upfront, when the residential property is transferred into any living trust.
As a concession, a trustee may apply to the Inland Revenue Authority of Singapore (IRAS) for a refund of ABSD (Trust), provided that all beneficial owners of the residential property are identifiable individuals and that beneficial ownership of the residential property has vested in all of these beneficial owners at the time of property transfer into the trust.
In addition, the beneficial ownership cannot be varied or revoked, or be subject to any condition subsequent, under the terms of the trust.
The refund amount will be based on the difference between the ABSD (Trust) rate of 35 per cent and the ABSD rate corresponding to the profile of the beneficial owner with the highest applicable ABSD rate.
The application for the refund must be made to IRAS within six months after the instrument is executed.
Else the 35% payment of ABSD (Trust) will not be refunded.
Latest
(1) ABSD Trust has gone up significantly to 65% from April 2023.
(2) You should not be involved in any trust arrangements during MOP period too.
