Property Investment | Decoupling – A Way To Minimize Or Avoid ABSD When Purchasing A Second Home

In short, Decoupling is when two individuals who are married or in a civil partnership separate their ownership status from the first property, so that the other individual is able to purchase a 2nd property without incurring or minimizing ABSD that would otherwise be payable if they purchased the property jointly. In other words, Decoupling can help to reduce payable tax and make it easier for them to own a second property.

The process of Decoupling involves changing the registered owners of both properties from joint ownership to individual ownership. This requires formal paperwork and legal documents to be drawn up and submitted to the relevant government body or agencies. It’s important to note that there may also be specific foreign buyer restrictions associated with purchasing second properties which must also be taken into account when planning your purchase.

Decoupling is becoming increasingly popular among couples as they look for ways to invest in property without paying extra tax like ABSD, as it gives homeowners more flexibility over how they split the taxation liabilities between themselves, giving them more control over how much each of them will pay out-of-pocket for the purchase of an additional property.

It is important to be aware that Decoupling of HDB flats can be a complicated process. As many homeowners began taking advantage of the HDB ownership transfer rule, in 2016 HDB tightened the ownership transfer rule to only allow the transfer of ownership under 6 special cases. They are:

1. Marriage
2. Divorce
3. Death Of An Owner
4. Financial Complications
5. Renunciation Of Citizenship
6. Medical Reasons

When it comes to Decoupling, there are two ways to do it. You can either transfer your share of the property as a gift, or sell parts of your share to the other owner.

You can also Decouple your property by selling your share to the other individual. This is usually done through a private sale transaction between the two parties. You will need to draw up and sign a Sales & Purchase Agreement (SPA) and submit it to the relevant government body or agencies. When selling your share of the property, there will be tax implications so it is important to consider this before deciding to go ahead with it. Additionally, you may need to get a lawyer involved if both parties are in agreement and agree on the terms of the sale.