Implications of Transferring Properties to Testamentary Trusts (ABSD and Property Count)
Disclaimer:
The information provided herein is for general informational purposes only and is not intended to be, nor should it be construed as, taxation, property, and/or legal advice. While we strive to ensure the accuracy and completeness of the information, it may not apply to every individual situation or specific case. The rules and regulations regarding Additional Buyer Stamp Duty (ABSD) and property count in Singapore can vary based on specific circumstances and may be subject to change. We strongly recommend that you consult with the relevant authorities or a qualified professional to obtain advice tailored to your specific situation. The Inland Revenue Authority of Singapore (IRAS) should be contacted for a case-specific review to confirm the applicability of the information to your particular circumstances.
There are no Additional Buyer Stamp Duty (ABSD) for transferring property into a Trust upon death (e.g. Testamentary Trust) nor any inheritance tax in Singapore. However, it may increase the property count of the beneficiary which can then affect their ABSD in buying future property.
Separately, do note that HDB regulations do change over time and cases are reviewed on a case by case basis. Such an arrangement does not guarentee that it will not affect the beneficiaries' HDB eligibility. The trustee will have to work with the beneficiaries accordingly should such circumstance arise.
Generally, other than properties that have been purchased, properties acquired or transferred by way of gift, inheritance, release, settlement, declaration of trust (where the beneficial owners of the trust property are identifiable), letter of authority and exchange are to be included in the property count. If the beneficiaries are not identifiable in the Trust, then property held in this trust should not be counted towards the property count of the unidentified beneficiaries.
For confirmation on the property count and stamp duties, you will need to check with IRAS to sight the documents and have a case-specific review to confirm on a particular case.
The following is extracted from IRAS website:
"The ABSD liability will depend on the profile of the buyer as at the date of purchase or acquisition of the residential property:
A. Whether the buyer is an individual or an entity
B. The profile of the buyer
C. The count of residential properties owned by the buyer (including residential property beneficially owned and held in trust) and
D. Whether the residential property is to be held in aliving trust"
Additionally according to the MOF press release:
"An identifiable beneficial owner of a trust residential property refers to an individual —
a. Identified in the trust deed or document as a beneficiary of the residential property; and
b. Who, because of the trust, has beneficial ownership of the residential property that is not, under the terms of the trust, revocable, variable, or subject to any condition subsequent."
If you are allocating the property into a trust (e.g. to a living trust, standby trust or well described testamentary trust), you will need a trustee to manage the trust. Managing a property trust can be time consuming and having a professional trustee doing it properly can also help prevent unwanted disputes and disagreements. While you can appoint someone you trust as the trustee, you should consider engaging a professional trustee instead.
Any trustee holding property may not be personally eligible to buy HDB flat
According to HDB website, a person holding a property on trust for another person/entity (i.e. the trustee) is also considered to have an interest in a property, thereby affecting his/her own eligibility to buy HDB flat.
HDB eligibility requires the person "Must not own or have an interest in any local or overseas private residential property;", and "You are considered to own or have an interest in a property if you have acquired a property through purchase or when it is: ... Acquired by holding on trust for another person/ entity."
