What is ABSD Trust? | New ABSD rule | Property Trust

📌 ABSD TRUST (New ABSD Ruling)

A new ABSD ruling on trust was introduced on 9 May 2022. ABSD (additional buyer stamp duties) of 35% will be imposed on any transfer of residential property into a living trust.

📌“Buying Property via Trust” Explained

• When buying via trust, there will be 2 parties: trustee and beneficiary
• For the all cases that I handled, the trustee is usually the parents who will manage the property
• The beneficiary is their young child under 21 years old

Reasons for using trust include: family planning and to avoid paying ABSD

Note that for “Trust”, you have to pay full cash. No cpf or loan allowed

📌 What is  a “living trust”

• Under the new rule, ABSD will be imposed on any transfer of residential property into a living trust
• Living trust is a trust setup by Buyer A when he/she is alive

• On the other end, we have the non-living trust, the TT (testamentary trust)
• TT is setup via a will and takes effect only when A pass away

📌Why is the government doing this?

• Before this new ABSD Trust measure, ABSD will not apply when a living trust has no clear owner
• For example, the beneficial owner of a living trust could be another trust
• Some high net worth individuals may use complex structures to mask their true ownership

• There are also extreme cases of trusts setup by buyer A for their future son
• This son could be unborn or the wife is not even pregnant yet

This new law will close the loophole and is unlikely to impact the market much

📌 Trustees can apply for a refund if certain conditions are met

There are 2 key conditions for ABSD Trust refund

1. All beneficial owners are “identifiable individuals” with clear ownership
2. Beneficial ownership has been vested in all these owners

This means parents who buy under their minor child will not get a refund because the child will only be “vested” when they reach 21 years old.

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