Decoupling - What is it?

Decoupling is a method used by property investors to avoid the Additional Buyer Stamp Duty (ABSD) on the purchase of their second property. It removes one party from the joint ownership of the property via the transfer of share from one party to another.

Primary Motivator

The revised ABSD rates that were implemented from April 2023 and the cost savings that can be achieved by decoupling is the primary motivation for home owners to consider this strategy.

Secondary Motivators

The secondary motivation is overcoming the financial limitations with regards to the loan that can be secured from a financial institution. According to MAS Loan To Valuation limits, property buyers are only allowed a 45% loan financing on a second property, with at least 25% of the property value to be paid in cash. Decoupling allows one party to purchase the property as a first timer with a 75% loan financing and a minimum cash requirement of 5% only. Both parties are able to retain their current property while purchasing a second investment property.

Property Decoupling On Different Property Types

HDB

Decoupling is no longer permissible since 2016 unless under six special circumstances such as financial and family hardships.

EC

Decoupling is only permitted once the 5 year Minimum Occupation Period (MOP) is fulfilled.

Private Property

Decoupling is permitted with no restrictions and recommended once the 3 year seller stamp duty wait out period is over to reduce the overall costs of decoupling.

Two Methods To Decoupling Private Property

1) Transfer as a gift without any payment made.

2) Transfer by way of sale or part purchase

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