A contentious legal dispute in the Singapore High Court concerning the controversial “99-to-1” property purchase arrangement has ended after the claimants formally discontinued their legal action against real estate agency PropNex Realty, an individual property salesperson, and a conveyancing law firm. The lawsuit arose after tax authorities audited the purchase of a luxury condominium unit and levied substantial back taxes along with statutory financial penalties.
While the withdrawal removes an immediate litigation exposure for the property agency, it brings fresh attention to the severe financial and legal risks facing buyers who engage in aggressive ownership splits to minimize stamp duty liabilities. Homebuyers navigating stamp duty obligations can examine our detailed breakdown of common ABSD misconceptions that cost buyers hundreds of thousands to better understand where private purchasers frequently run afoul of statutory regulations.
High Court Discontinuance Resolves High-Profile Rivière Dispute
The discontinued suit was initiated in February 2025 by Indonesian buyers Kevin Rahim and Jessica Tjitra in the General Division of the High Court. The claimants sought approximately S$849,287 in damages to cover tax assessments and penalties imposed by the Inland Revenue Authority of Singapore (IRAS) over their purchase of a residential apartment at the Rivière condominium along Jiak Kim Street in Robertson Quay.
According to court filings, Ms Tjitra exercised the option to purchase the Rivière unit for S$3.3 million in July 2022 in her sole name, shortly after obtaining Singapore Permanent Resident (SPR) status. At the time of purchase, first-time SPR residential buyers were subject to an Additional Buyer’s Stamp Duty (ABSD) rate of 5 percent, whereas foreign buyers faced a 30 percent rate. One month later, in August 2022, Ms Tjitra sold a 1 percent share of the property to Mr Rahim, who paid the 30 percent foreigner ABSD solely on that 1 percent fractional interest.
The Inland Revenue Authority of Singapore audited the purchase and determined that the sequence of transactions constituted an artificial tax avoidance scheme under the Stamp Duties Act. The tax authority recalculated the stamp duty liability by applying the full 30 percent foreigner rate across the entire S$3.3 million valuation, supplemented by a statutory surcharge. Faced with this clawback, the buyers commenced litigation alleging that their property agent and conveyancing lawyers had misrepresented the legality and regulatory risks of the fractional transaction structure.
In October 2025, the claimants filed a formal notice of discontinuance, terminating the suit without a full trial. PropNex subsequently notified the Singapore Exchange (SGX) that the proceedings against its operating subsidiary had been discontinued, though the precise commercial terms behind the withdrawal were not made public.
Mechanics of the Contested Two-Step Property Purchase
The “99-to-1” technique emerged in private residential sales as a method to circumvent ABSD rules introduced under successive property market cooling packages. In an ordinary joint tenancy or tenancy-in-common purchase involving multiple individuals, stamp duty is assessed on the entire property purchase price at the highest applicable buyer rate among all purchasers. If a Singapore Citizen or Permanent Resident purchases alongside a non-citizen or an existing property owner, the higher rate applies to the aggregate price.
To bypass this upfront requirement, promoters of two-step arrangements structured the purchase sequentially. Step one involved the eligible lower-rate buyer signing the sale and purchase contract or option in their sole name. Step two followed shortly after, where the original buyer transferred a nominal 1 percent share of the property to an affiliated co-purchaser, such as a foreign spouse, parent, or family member who already held residential real estate.
The underlying premise asserted by promoters was that ABSD would apply only to the market value of the 1 percent transfer, allowing the second buyer to secure joint legal ownership and co-sign the bank mortgage without paying the elevated tax rate on the remaining 99 percent. However, as demonstrated by regulatory interventions, structured transactions devoid of genuine economic substance fail legal scrutiny under statutory anti-avoidance principles.
IRAS Anti-Avoidance Powers Under Section 33A of the Stamp Duties Act
The legal foundation for the tax authority’s enforcement rests on Section 33A of the Stamp Duties Act 1929, Singapore’s statutory general anti-avoidance provision for stamp duties. Under Section 33A, the Commissioner of Stamp Duties possesses broad statutory powers to disregard, recharacterize, or reconstruct any contract, agreement, or arrangement that alters the incidence of tax, relieves any person from stamp duty liability, or reduces the amount payable.
Where the Commissioner determines that a multi-step transaction was arranged primarily to obtain a tax benefit rather than for commercial or bona fide family reasons, the authority treats the purchase as a single integrated transaction. Under Section 33B of the Act, IRAS is additionally empowered to impose a statutory surcharge of 50 percent on the recovered stamp duty deficit.
The enforcement campaign against fractional tax avoidance gathered substantial momentum following an intensive compliance review. IRAS examined approximately 2,000 residential transactions executed between 2018 and 2021 that showed fractional ownership splits. By mid-2024, the tax authority confirmed that 166 transactions were formally identified as tax avoidance schemes, leading to clawbacks of roughly S$60 million in unpaid ABSD and statutory surcharges. Enforcement has also extended to criminal prosecutions, documented on the IRAS newsroom regarding convictions for false declarations during stamp duty audits, proving that misrepresenting purchase motivations carries severe criminal penalties.
Agency Compliance and the Limits of Salesperson Liability
The litigation against PropNex spotlighted the professional boundaries of estate agencies and property salespersons. In defense filings, the agency argued that individual salespersons operate as independent contractors rather than direct employees, and that agents hold contractual obligations to refrain from rendering unauthorized tax or legal advice.
Property agencies further emphasized that salespersons engaged at new launch show flats act primarily as project marketing representatives for property developers. Statutory liability for declaring truthful transaction particulars and paying correct stamp duties rests firmly on the purchasing parties named on official instruments. When tax authorities discover non-compliance, demand notes are issued directly to the buyers, not to marketing intermediaries.
Nevertheless, real estate professionals operate under strict professional conduct standards overseen by the Council for Estate Agencies (CEA). The regulator’s Code of Ethics and Professional Client Care prohibits salespersons from presenting misleading legal or tax interpretations to induce transactions. Salespersons who facilitate unlawful tax avoidance schemes face disciplinary tribunal hearings, financial penalties, and potential suspension or revocation of their professional registration. Buyers can review our analysis of hidden risks of decoupling property ownership to avoid ABSD to evaluate how regulatory compliance impacts asset structuring decisions.
Legitimate Co-Ownership Versus Tax Avoidance Arrangements
The regulatory clampdown on artificial arrangements does not eliminate legitimate fractional ownership in Singapore real estate. Tenancy-in-common ownership remains a standard legal mechanism allowing co-owners to hold defined shares in a property matching their financial contributions, inheritance distributions, or estate planning needs.
The distinction drawn by tax authorities centers on commercial reality and transaction timing. In bona fide co-ownership, all parties execute the primary option to purchase together at the outset, and applicable stamp duties are paid upfront according to the profile of each co-owner. When buyers require financing support, joint mortgages can be established through standard banking channels without resorting to contrived two-step transfers. For an exhaustive overview of prevailing tax thresholds, readers can reference the comprehensive Singapore ABSD guide and remission rules to verify applicable obligations prior to committing to an option to purchase.
Singapore’s residential market operates under a strict regulatory framework designed to ensure fiscal equity and curb speculative activity. Homebuyers must recognize that promotional tax schemes carry immense long-term liabilities. Consulting qualified legal and tax advisers on Singapore property cooling measures and buyer guidelines remains the only reliable route to safeguard real estate investments from future enforcement action.
