Insider Strategies to Buy 2nd Property in Singapore Without ABSD

The implementation of increased Additional Buyer's Stamp Duty (ABSD) rates has significantly transformed the approach to property ownership and investment assessment in Singapore. Singaporean real estate investors in the 1990s efficiently navigated the market by leveraging rental income from one property to fund the acquisition of another. How have things evolved?

In reality, the ABSD has emerged as a significant hurdle that compels even the most astute investors to reevaluate their strategies. This concise guide explains how to buy 2nd property in Singapore without ABSD.

Depending on your nationality, you may be eligible for ABSD remission under FTAs or not. Nationals or permanent residents of countries such as the United States, Norway, Iceland, Liechtenstein, and Iceland pay the same ABSD rates as Singaporeans when they buy residential properties in Singapore.

This privilege arises from the 'National Treatment' obligation specified in the Singapore-European Free Trade Association (EFTA) agreement. Persons who are citizens or permanent residents of these countries are eligible for ABSD remission in accordance with the provisions of the applicable free trade agreements.

The strategy of investing in commercial properties in Singapore without paying the Additional Buyer's Stamp Duty (ABSD) is an attractive option for individuals looking to buy a second property there. Consider that commercial properties are not subject to ABSD rates; this is straightforward. They represent an attractive choice for investors seeking to expand their property portfolio without incurring additional stamp duty, as they are exempt from it.

It is essential to recognize that commercial properties generally yield higher returns, averaging approximately 5%, compared to the typical 2% to 3% observed in the residential sector. Commercial property investments are financially advantageous due to the potential for income growth.

It is essential to have a thorough comprehension of the distinct features and associated risks of commercial properties. First of all, commercial properties are typically more expensive than residential properties; therefore, the cash investment required to buy a commercial property is higher.

To add insult to injury, unlike in residential properties where a CPF may be used for the down payment, in commercial properties, the down payment must be made wholly in cash. The Goods and Services Tax (GST), currently 8%, obviously applies to commercial properties. The GST amount must be paid in cash at all times.

Although investing in commercial property can be highly profitable, it requires comprehensive research and an in-depth understanding of Singapore's commercial real estate market, which differs significantly from the residential market.