99-1 Property Ownership for Bigger Loans & No ABSD

Have you heard of the 99-1 property ownership strategy and how it can potentially help you take a bigger loan and save up to $100,000 from stamp duties?

📌Property Ownership in Singapore

Before we talk about 99-1, we have to talk about the two methods of property ownership.

99-1 property ownership

First is joint-tenancy, commonly used by couples. Both have equal share and where one owner passes away, the other will automatically inherit the entire property even when there’s no will around.

Second method will be Tenancy-in-Common. This is commonly used for investment properties. Each owner owns a specific number of shares. When one co-owner passes away, the other share does not automatically get passed over to the surviving partner.

Before any decoupling is done, most couples own the property in 50:50 joint-tenancy format, but after 99-1, the share of ownership is literally 99% and 1%.

📌When is 99-1 property ownership strategy used?

There are 3 scenarios

99-1 property ownership

#1 When you need both buyers’ income to take a bigger loan

This happens when one single buyer cannot meet the TDSR requirements to buy their first property with his/her income alone. So, you combine both spouses’ income in order to qualify for the bigger loan required to buy that dream property.

For such cases, usually banks will require that these 2 co-owners are related e.g., husband and wife, parents and child or Siblings.

#2 First time property buyer who intends to buy a second condo later

This is a form of future-planning. The key idea behind 99-1 property ownership method is that: This couple has the intention to buy a second property in due time. When the couple is ready to buy that second property, the outgoing spouse (1% share) will transfer his/her share to the party holding 99%.

The beautiful part is that the stamp duty is based on that 1% property value only. In addition, when the outgoing spouses relinquish her 1% share, she will have no property under her name. Therefore, she can buy the next property with no ABSD

#3 Singaporean couple with one foreign spouse, buying their first matrimonial home

The third scenario is when a Singaporean couple with one foreign spouse wants to buy their first matrimonial home. Regardless whether they are going to buy one property or has intention to own two properties eventually, this method will help them save on ABSD

First Property: When a couple and a foreign spouse buy their first matrimonial home, they can apply for ABSD remission (i.e., No ABSD payable for this property)

Second Property: When this couple is ready to decouple and buy a second investment home, the foreign spouse who’s holding on to 99% will buy over the 1% share. The outgoing spouse must be a citizen. After decoupling, the outgoing spouse has no property under his name and therefore pays no ABSD for this second home

📌99-1 Property Ownership | Challenges

There are 3 main challenges

1. You literally own what is stated (i.e., 99% or 1%)

2. The mental stress of supporting 2 loans after buying the second home

3. Share allocation- Who should hold the 1%?

📌99-1 Property Ownership – SUMMARY

In theory, every family should plan to have two properties, one for own-occupation, the other to rent out for passive income. If you only own one property, no matter how much the property appreciates, you still need to buy a replacement home at inflated prices after selling.

But if you have 2 properties, one will be used as rental unit for passive income. That’s the ideal scenario. The key is that the couple must be committed to work hard because they have to service the two home loans for the next 30 years.

Paying the down-payment for one property or even the second property is not the hardest part. The stress is the monthly mortgage loans that you have to service for the next 20 to 30 years. so, 99-1 property ownership strategy may not be for everyone.

However, this 99-1 strategy is a better strategy the sell-one-buy-two strategy. The idea about sell-1-buy-2 is to sell your HDB, take the excess cash and the couple will buy 2 private properties immediately. In that context, you’ll have two loans to service with immediate effect. That’s actually more stressful.

Therefore, I feel sell-1-buy-2 -strategy is also not meant for everyone. At least, 99-1 Strategy allows the couple to buy one property first and buy the second investment home later when they feel ready. This will be more prudent

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Dennis Lim

Dennis has more than a decade of experience investing in real estate. Like many fellow Singaporeans, he grew up in a HDB flat with dreams to live in a condominium. Through careful financial planning & hardwork, this became a reality when he was 30. He now owns 3 private properties in Singapore and has helped hundreds of Singaporeans to achieve their goal of upgrading their homes in land-scarce Singapore.

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