ABSD is a critical function for many businesses, yet it is often overlooked. This blog post discusses the importance of ABSD and how it can benefit your business.
I remember when I first started my business, I had no idea what ABSD was or why it was important. My accountant explained that ABSD stands for “Accounts Receivable Based on Sales Data.”
Basically, this means that if you have sales data from customers who purchase through your company’s website or other online channels, you can use this information to track how much money is owed to you by each customer.
This may seem like a small thing, but trust me – tracking Accounts Receivable is crucial to the success of any business! Here’s why:
The term “absd” is a shortened form of the phrase “absolute distance.” It is a measure of the distance between two points, usually expressed in terms of the coordinate system being used.
In general, the absolute distance between two points is the magnitude of the difference between their coordinates.
But First, What Is ABSD?
The additional buyer’s stamp duty (ABSD) is a levy that is charged on top of a buyer’s stamp duty (BSP) for all property transactions.
The Additional Buyer’s Stamp Duty (ABSD) is a government tax on all purchases of residential properties in Singapore. The ABSD was introduced as a cooling measure in 2011 and applies to both Singaporean and non-Singaporean citizens.
Since the ABSD was introduced in 2011, the rates have been adjusted three times in response to market conditions – in 2013, 2018, and 2021.
according to current market rates.
A Singapore government tax on real estate purchases, ABSD is calculated based on the price of the property and on the citizenship of the purchaser.
The additional buyer’s stamp duty (ABSD) is a major concern when investing in more than one residential property.
A 5% to 30% ABSD (additional buyer’s stamp duty) is imposed on foreign and Singaporean property purchasers. This huge fee scares most potential buyers away.
A husband and wife, as well as two real estate agents, were recently caught backdating an “Option to Purchase” (OTP) to 5 June 2018, in order to pay a lower ABSD of 3%.
The sellers and the buyers were each given six-week sentences and $276,000 in fines for tax evasion. Their agents were each given a four-week jail sentence.
As of 9 May 2022, any transfer into a Living Trust of property in Singapore will incur a 35% ABSD (Living). This move is to close more loopholes in the property market.
Now, parents looking to buy a property for their child will have to think twice about doing so.
However, there are ways to avoid paying ABSD. Legally, of course!
If you’re interested in learning how to do it, keep reading.
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Who needs to pay BSD?
The Buyer’s Stamp Duty (BSD) is a tax that must be paid when the property is sold or transferred. The purchaser of the property is liable for the payment.
By way of inheritance, the property buyer is liable to pay the Buyer’s Stamp Duty (BSD). This includes cases where the stamp duty is payable by way of purchase, gift, or inheritance.
Declaration of Trust Trust Deed:
The beneficial owner of the property will need to pay the tax.
Who is exempted from BSD?
There are some instances when BSR will not be appropriate:
There are some instances where BSD won’t be applicable, such as when the sale and purchase of properties are aborted, the transfer of an HDB flat is within the family, or the transfer of assets is between associated permitted entities.
Additionally, BSD won’t apply to the acquisition of a residential property on, or before 19th February 2018, if the Option to Purchase is granted on or before 19th February 2018 and is exercised before 12th March 2018. Finally, BSD also doesn’t apply to the acquisition of residential land for non-residential development.
If your property purchase falls under any of these categories, you can write to the Inland Revenue Authority of Singapore (IRAS) within 14 days of acquiring the property to request an exemption from the BSD.
To send a fax, you’ll need to:
If you are applying for a remission of the BSD, you will need to send in:
- A copy of the acquisition.
- The original letter of undertaking to comply with the remission conditions
- Other documents or evidence necessary for the application
If the transaction occurs overseas, the BSD (Buyer’s Stamp Duty) must be paid within 30 days of receiving the documents in Singapore. The BSD cannot be paid in installments, so you will need to have enough funds to cover the entire amount.
In 2020, the Economist Intelligence Unit ranked the city-state of Singapore as the fifth-best city in the world for expats to live and work in. It has also been named the most liveable city in Asia for 15 consecutive years!
The Often Overlooked Function Of ABSD
Most homeowners only focus on the price increase when ABSD rates go up, but fail to realize the purpose of this tax.
It’s important to understand the history behind HDB’s Cooling Measures, and why it plays a significant role in the Singaporean property market.
In 2011, ABSD was introduced to prevent foreign buyers from overbuying residential property.
Singapore is a great place to invest in property because it is a stable country with good infrastructure.
To combat the alarming number of foreign buyers snapping up properties in Singapore, ABSD was implemented.
The ABSD rates have been increased 4 times over the years, each time to be in line with the changing profile of buyers.
As a Singaporean homeowner, you may be wondering about the importance of keeping foreign buyers in check.
According to industry analysts, housing prices would be much higher if ABSD wasn’t in place.
Like almost every market, the property market in Singapore is dictated by the balance between demand and supply.
ABSD is a much-needed tool to cool the property market in Singapore, as prices are getting out of hand.
ABSD may seem like a negative thing at first, but it’s actually helping to keep home prices from getting too expensive.
However, it is undeniable that compared to before the ABSD, Singaporeans now need to pay more to secure a second or third home.
If you’re an investor, you probably already know that the ABSD rates were raised during 2021.
This marks the fourth time in 2 years that ABSD rates have been adjusted.
Homeowners who intended to buy another home were naturally worried, as they had to shell out a much higher price for their new properties.
With the implementation of the ABSD, are Singaporean property prices really worth it?
Before we answer this question, let’s take a look at the history of ABSD, and why it is a necessary policy despite rising home values.
If you’re not tracking your Accounts Receivable, you could be missing out on a lot of money. ABSD can help you keep tabs on who owes you what so that you can follow up and get paid in a timely manner.
This is just one example of how important ABSD can be for businesses – don’t overlook its potential!
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