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
- All beneficial owners are “identifiable individuals” with clear ownership
- 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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