In Singapore, many couples jointly own private property and later consider purchasing a second property for investment or family planning. However, with ABSD at 20% or higher for a second property, the cost can be prohibitive. One effective legal strategy to avoid ABSD is the Part Sale — commonly known as decoupling.
What Is a Part Sale (Decoupling)?
A Part Sale is when one co-owner of a private property sells their share to the other co-owner. Once completed:
- The buyer becomes the sole owner
- The seller is no longer tied to any property
- The seller can now purchase another property as a first-time buyer and avoid ABSD
Important: IRAS treats this as a legitimate sale. Buyer's Stamp Duty (BSD) is payable on the transferred share. The transaction must be conducted at market value.
When Does Decoupling Make Sense?
- You jointly own a private property (HDB decoupling is NOT allowed)
- You want to purchase a second residential property
- The ABSD savings exceed the costs of the Part Sale transaction
- One co-owner can qualify for a new loan independently (pass TDSR alone)
Step-by-Step Process
- Engage a Lawyer: Both parties need separate legal representation. The transferring party's lawyer prepares the transfer documents.
- Valuation: The property must be valued at market value. BSD is calculated on the transferred share's market value.
- Stamp Duty Payment: BSD is paid by the buyer (the remaining co-owner) on their share acquisition.
- Refinancing: If the property has an existing mortgage, the loan must be restructured under the sole owner's name alone. The bank must approve this — the sole owner must pass TDSR independently.
- CPF Considerations: If CPF was used to purchase the property, the transferring party must refund their CPF portion plus accrued interest to their CPF account.
- Completion: Upon completion, one party becomes sole owner, the other is free to purchase as a first-time private property buyer.
Costs Involved
| Cost Item | Estimated Amount |
|---|---|
| Buyer's Stamp Duty (BSD) on transferred share | 1%–4% of the transferred value |
| Legal fees (both parties) | $5,000–$8,000 |
| Refinancing fees (if applicable) | $2,000–$4,000 |
| Valuation fee | $500–$1,000 |
| CPF refund (accrued interest) | Varies — up to significant amounts for long-held properties |
Key Risks and Caveats
- TDSR for the remaining owner: The sole owner must qualify for the full existing mortgage independently. If income is insufficient, the bank may not approve the restructuring.
- Additional Buyer's Stamp Duty for the buyer's share: If the buyer (remaining co-owner) already owns other properties, ABSD may apply on the acquired share.
- CPF refund obligation: Significant CPF accrued interest can erode the financial benefit of the Part Sale if the property was bought many years ago.
- SSD: If the original property was purchased within the SSD window (within 4 years), SSD may be triggered on the transferred share.
- Genuine transaction: IRAS scrutinises Part Sales to ensure they are genuine market transactions, not artificial arrangements to avoid stamp duty.
Is Decoupling Right for You?
The answer depends on your specific financial profile, the equity in your current property, your CPF balance, and the ABSD savings achievable. A qualified property advisor can model the numbers for your exact situation.
As a general rule: Decoupling makes financial sense when the BSD on the transferred share is significantly less than the ABSD you would pay on a second property purchase. For most mid-market properties, the math usually works out favourably.
Conclusion
A Part Sale (decoupling) is a powerful but complex strategy that requires careful legal, financial and CPF planning. When executed correctly, it allows married couples to restructure private property ownership and access a second property without bearing the full weight of ABSD. Always engage an experienced property lawyer and a licensed salesperson before proceeding.