Top 5 Most Common Red Flags To Watch Out For When Investing In Singapore Property
Investing in Singapore property has long been considered a lucrative and stable way to build wealth. However, like any investment,...
Read More
TLDR
The 99-to-1 property ownership split in Singapore, where one spouse holds 99% and the other 1%, is used to reduce Additional Buyer’s Stamp Duty (ABSD) when buying multiple properties. However, a recent High Court case (Hillcrest Arcadia) revealed that beneficial ownership depends on actual financial contributions, not just title shares. The court indicated that intending to use this split to avoid ABSD could be unlawful, even if not penalized when the plan is unexecuted. The Inland Revenue Authority of Singapore (IRAS) may audit and impose heavy penalties if tax avoidance is detected, with no time limit on such audits. Despite this, many buyers are misled about the risks by agents or lawyers. Buyers should seek clear advice and understand the risks before using this strategy, especially as penalties have become more severe with rising property prices. Personalized, data-driven real estate guidance is recommended for making informed buy, sell, or wait decisions.
The 99-to-1 property ownership split, a strategy commonly used in Singapore for over a decade, involves one co-owner (typically a spouse) holding 99% of a property, while the other holds 1%. The underlying intention is that when funds become available for each to own a separate property, the 1% share is transferred to the other spouse. This theoretically incurs Buyer’s Stamp Duty (BSD) only on the 1% portion, allowing the spouse who now has a “zero” property count to purchase a second property without incurring Additional Buyer’s Stamp Duty (ABSD). This has long been a cornerstone of the “sell one, buy two” strategy. However, a recent High Court case has cast light on the legality of this practice.
The Hillcrest Arcadia Case:
In a notable case, a couple purchased a Hillcrest Arcadia condo with a 99:1 ownership split. The female spouse claimed 99% ownership, as stated on the title. The relationship, however, dissolved less than a year later. When the couple split, she asserted full ownership of her 99% share.
However, the High Court intervened. The judge ruled that based on the boyfriend’s financial contributions, he effectively owned 54% of the property. This decision undermined her 99% claim, emphasizing that financial contributions, not just paper titles, determine beneficial ownership.
More significantly, the case revealed a crucial detail: “The pair admitted that they planned for Mr Ngor to transfer and pay taxes on his one per cent share to Ms Wong when they decide to buy a second property. Justice Lee said there was no nefarious intention or knowledge that this would be an unlawful act. Moreover, the plan was never carried out.”
The phrase “would be an unlawful act” is key. It suggests that while the Court did not penalize them (as the plan was unexecuted), it implicitly deemed the intention to circumvent ABSD through this method as problematic.
Official Stance on 99-to-1 Splits:
A parliamentary response further clarifies the official stance: “Whether a ‘99-to-1’ arrangement involves tax avoidance depends on the facts and circumstances surrounding the specific case. Should IRAS determine that tax avoidance has occurred, it will recover the rightful amount of stamp duty from the buyers, and may impose a 50 per cent surcharge on the additional stamp duty payable. There is no statutory time limit for stamp duty audits.”
This indicates that while a 99-to-1 tenancy-in-common split is not inherently illegal, its contrived use specifically for tax avoidance can be challenged by authorities.
Lack of Clear Communication to Buyers:
Despite this nuanced reality, many buyers report being assured by property agents or lawyers that the 99-to-1 strategy carries no risks. This often leads to buyers unknowingly entering a legal “grey area,” only to face audit letters and potential penalties later.
There is a pressing need for more transparent communication regarding the risks associated with such strategies. If a 99-to-1 split is recommended, all potential risks, not just the perceived benefits, should be clearly articulated to buyers. In 2025, with higher property prices, the penalties for tax avoidance could be substantial, making it even more critical for buyers to be fully informed.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Singapore’s Housing Phenomenon: A Success Tale Calling for Tweaks – Insights from the Experts
TLDR Singapore's housing system has been praised for its effectiveness in meeting citizens' homeownership desires. The public housing program by...
Read More
6 Essential Factors HDB Upgraders Should Be Aware Of Before Purchasing a Condo in 2023
TLDR When upgrading your property, consider factors like rental rates, Buyer's Stamp Duty adjustments, higher interest rates for bank loans,...
Read More
The Sneaky Role of Property Appraisals in Shaping Singapore’s Home Prices
TLDR When it comes to the real estate market in Singapore, understanding property valuations and the impact on mortgage loans...
Read More
When Should You Consider Lowering the Price of Your Property That Has Been on the Market for Months?
TLDR Selling a property can be challenging without the right price strategy. Adjust your asking price to attract more buyers...
Read More
Singapore Property Bubble Ahead? My Friends Share My Market Predictions
TLDR The author delves into various opinions on the Singapore property market for the year 2023. Experts have differing views...
Read More
Top 5 : Singapore’s Most Desirable Properties: A Look at the City’s Most Coveted Real Estate
Singapore, a bustling city-state known for its impressive skyline and thriving economy, is home to some of the most desirable...
Read More
Why The URA Master Plan Matters For Your Property’s Potential
TLDR The URA Master Plan entails significant shifts like the relocation of Paya Lebar Airport or creation of Punggol Digital...
Read More
Discover Singapore: 5 Must-See Attractions for a Culture Lovers’ Paradise
TLDR Singapore stands out as a top destination for culture lovers, offering a rich blend of heritage and modernity through...
Read More
Top 5 Reasons : Is It Still Worth It For A Foreigner To Invest In Singapore
Singapore, a small yet prosperous city-state in Southeast Asia, has long been an attractive destination for foreign investors. Its strategic...
Read More
What is a Tenancy Agreement (TA)
TLDR When it comes to understanding property jargon, it's crucial to familiarize yourself with the specifics of a Tenancy Agreement...
Read More
Top 5 Bookstores in Singapore for Book Lovers
Singapore, a bustling cosmopolitan city, is known for its rich cultural heritage, diverse population, and of course, its love for...
Read More
Top 5 : Golden Tips to Spot a Good Investment Property
Investing in real estate can be a lucrative venture, but it's essential to know how to spot a good investment...
Read More
Will New Launch Condos See a Drop in Prices Soon?
TLDR The real estate market in Singapore is experiencing a trend of lackluster bids for prime properties in various locations....
Read More
Top 5 Reasons : How Investing in a Luxury Condominium in Singapore Can Boost Your Portfolio
Investing in a luxury condominium in Singapore is an attractive option for investors looking to diversify their portfolio and enjoy...
Read More
5 Reasons Why Districts 9 and 10 are the Next Big Thing in Singapore Real Estate
Singapore is renowned for its thriving real estate market, with many desirable neighborhoods and top-notch properties. However, when it comes...
Read More
A Comprehensive Guide for Buying Landed Real Estate in Singapore
TLDR When it comes to buying landed property in Singapore, there are three main types: terrace houses, semi-detached homes, and...
Read More
Top 5 Reasons : Why Investing in Singapore’s Property Market Is a Smart Move for Expats – Expert Analysis!
Singapore, a thriving city-state in Southeast Asia, has long been a popular destination for expatriates seeking new opportunities and a...
Read More
5 Singapore Property Trends to Watch in 2023: Expert Weigh In
5 Singapore Property Trends to Watch in 2023: Expert Weigh In Top 5 Singapore Property Trends to Watch in 2023...
Read More
6 Hot Property Market Trends in Singapore 2024: What Buyers Should Anticipate
TLDR When diving into Singapore's property market, expect a rollercoaster ride as trends shift drastically in 2024. Landlords and tenants...
Read More
