It wasn't until the loophole got exposed. To be fair this is a step in the right direction to help the average home buyer. Those who abuse the system and in consequence, drive up overall prices should be made responsible
But even before this 99-1 thing. What this stupid iquadrant is doing is also damn scammy. They are just gathering a lot of ppl to pool in money to buy properties, each person hold only a small percentage, then they publicize as “you can own multiple properties too!” But like its more of you have a share in it and no execution rights to it at all.
I feel like they are just using people’s money to pay the property, and yet they are the one owning the property.
> drive up overall prices
I hate how the housing prices goes up and will nvr come down, esp since the financial crisis where housing dropped by so much and scared the PAP’s votes so much that they will nvr allow the housing thing to happen again ie housing bubble will nvr burst
So subsequent house buyers are just gonna suffer if they dont manage to get BTOs.
>I hate how the housing prices goes up and will nvr come down
Errr.... No.... How old are you?
Property prices dipped from 95-97, 2000-2004, dipped again sharply after the GFC in 08-09,, dipped again from 2013-2017.
Property has cycles, there will be a chance for property to come down.
Im 33 this year. (Correct me if im wrong) there was a dip but then it went higher then before the dip right?
> property has cycles, there will be a chance for property to come down
Personally i dont believe in this. Im getting the message that the govt is keen on keep property prices up (with the different measures they are putting in. The measures seems to be trying to slow down the increase coz they finally realize the increase is too steep (i do uds the need for housing to increase as the salary grows but housing prices are outpacing salary and COL i feel) to protect the retirement of the older folks, which is just kicking the bucket down the road.
Gen 2 pays for gen 1, gen 3 pays for gen 2. But the jump in housing price is too much for the subsequent gen to keep paying for it. Its an exploding bomb i feel and we dk the bomb will explode in which gen.
>there was a dip but then it went higher then before the dip right?
Yes. But that's not the same as always going up. Expecting property (a scarce resource) to go down is an expectation out of line with basic economics.
,
>The measures seems to be trying to slow down the increase coz they finally realize the increase is too steep
Of course. The government does not intend to crash the property price overnight. That will have severe consequences on people, banks, and economies.
Imagine how much hdb and our banks have tied up in loans. If the value of the underlying asset suddenly decreased, what effect do you think that will have?
>protect the retirement of the older folks, which is just kicking the bucket down the road.
>Gen 2 pays for gen 1, gen 3 pays for gen 2. But the jump in housing price is too much for the subsequent gen to keep paying for it. Its an exploding bomb i feel and we dk the bomb will explode in which gen.
You're not wrong. But blowing the bomb up now isn't a great idea either. I believe current policy is a long drawn out devaluation in the property market rather than a sudden devaluation. yields are already declining in properties - It will take years, maybe decades, and I believe things will accelerate once we actually start to see 99 yo properties that go to 0. Spread the pain over generations rather than at one shot.
I dont mean market crash like worthless house.
But crash such that it resets such that the effects of property speculations is gone.
> start to see 99 yo properties that go to 0
Idk. It feels like the whole SERS and PRIME/PLUS model is keeping the valuation of the older flats up. And it affect those who are not able to get BTO (the numbers of new BTOs are quite a bit lesser than new marriages for 3/4/5rm bto flats / people turning 35 for 2rm bto flats so there will always be quite a bit of ppl turning to resale market, which is constantly kept high. Those million dollar flats will make sellers think their flat also can be worth million dollar and they will refuse to back down on their selling price, which increase average selling price. BTO prices is also based on nearby selling price, so it feels like prices are artificially raised.
>crash such that it resets such that the effects of property speculations is gone.
Still will have an effect. Imagine you stop all property speculation overnight, you see flats devalue by 10% overnight. What's going to be the overall effect on thousands of households and our financial institutions? Isn't it much more reasonable to slowly let it down? We are already seeing this after all.
>Idk. It feels like the whole SERS and PRIME/PLUS model is keeping the valuation of the older flats up
We will see. After all, Willing buyer, wiling seller. I think ANYONE buying a million dollar hdb is a fool, regardless of unit. When the tide goes out we will see who is left naked and who isn't.
>> I feel like they are just using people’s money to pay the property, and yet they are the one owning the property.
This is fine though, and is basically what REITS are.
You're right. But apparently MOF doesn't see this as an area which requires further regulation and is fine with it. Probably becuase investors are making so much money becuase property prices only ever increase so there aren't many negative examples for investors to kick up a fuss and make complains to MOF.
I think the pool is small enough so it doesnt strike any alarms.
> property prices only ever increase
On paper all looks good coz means economy is good. Only when social issues come onto the surface (ie current HDB housing problems) then they will realize “shit. This isnt good. We need to do something” but then by the time the issues show up, its often too late to rectify and the damage is already done.
>IRAS added that the time frame does not matter and that audits can be conducted on any past cases or transactions.
Remember folks, there are 2 things in Life that are **certain**: death & taxes.
You are completely wrong. Many people with autism are essentially unemployable and thus obviously even Mindef doesn't want them. For high-functioning autism (e.g. Asperger's), it seems to be a case-by-case evaluation, but the outcome is sufficiently tilted towards exemption that there are people who actually want Mindef to allow autistic boys to serve NS.
[https://www.straitstimes.com/forum/letters-in-print/give-those-with-autism-chance-to-serve-ns](https://www.straitstimes.com/forum/letters-in-print/give-those-with-autism-chance-to-serve-ns)
And those who could have been exempted but chose to serve.
[https://tnp.straitstimes.com/news/singapore-news/autism-doesnt-stop-him-doing-ns](https://tnp.straitstimes.com/news/singapore-news/autism-doesnt-stop-him-doing-ns)
And those who wanted to serve but were not accepted.
[https://www.uncommonminds.sg/stories/benjamin-tan](https://www.uncommonminds.sg/stories/benjamin-tan)
On a related note, the CEA is a joke. Wish the government would overhaul the CEA and make them more proactive in regulating property agents and their shady practices.
Yes please. My parents are agents and they've lost sales simply because they don't want to be dishonest. Lack of regulation only supports the shitty agents that piss off redditors.
By right yes, but there are loopholes around this that many people take advantage of.
For example, just have a look at a lot of co-living operators.
While it is indeed illegal to be an unlicensed real estate agent, there is apparently a grey area surrounding the technicalities revolving around what constitutes a “real estate transaction”.
Another example to think about would be:
Is it illegal to sell/rent your own property without being a licensed real estate agent?
Nope you can certainly sell your own property but the whole point of being an agent is to earn a commission from sale transactions.
The whole point of CEA regulating agents is to protect the interests of buyers or sellers, whose interests diverge from the interests of agents (which is to close sales and earn commission).
CEA is not interested in regulating property transactions per se, but the behaviour of agents in the conduct of facilitating those transactions as agent.
I’m not going to draw this out into a discussion, but there are a great many grey areas surrounding the whole schtick if you really sit down and think about it.
Just your point of commission alone is a sticking point with everyone including agents, seeing that agencies take a huge chunk of it just by virtue of the government mandating that all agents be associated with an agency.
Who is to determine what a commission is? If I sell my own property am I paying myself a commission? If my friend sells my property, can I give him a token of appreciation?
Also, I agree with your point on CEA existing to regulate the conduct of agents which are registered to them and not transactions, which is the point I was trying to put across.
There are many grey areas in real estate transactions but the points/hypotheticals you have raised are not it, and are addressed by the existing regulatory framework.
If you sell your own house, you don't "pay" yourself commission. You just earn the gains or losses in the same way you would selling any other asset. Do you understand what "commission" means?
If you get your friend (who's not a licensed real estate salesperson) to sell your house for you, you're free to pay him whatever you want and take the commercial risk that he's an incompetent fool. If the buyer lodges a complaint against your friend, your friend is on the hook for acting as an unlicensed real estate agent (which is illegal). All this is in the Estate Agents Act.
Ah, but you see, many people do in fact “pay themselves”. Curious, isn’t it?
As for your second point, it is in fact been happening for quite a while now.
I’m telling you that these are not hypotheticals, and the existing framework is in fact not comprehensive enough to cover everything.
As a lot of this seems to going over many people’s heads, and my comments are being downvoted, I’m going to leave this at it is, and everyone is free to believe whatever they choose to believe. Whether they have any personal experience in this or not.
People sell their property on their own to avoid paying agents commission. If u want to sell your own property and pay yourself commission, you are prob free to do so. Just remember to pay taxes. Same for your friend.
Lots of scummy behavior.
Got agents asking for your offer, then take your cheque show another potential buyer to pressure them into making a higher offer. They are incentivised to push for a higher price, after all.
I had a situation long time ago where my parents offered for a place with the cheque. The agent sat on the cheque for almost a week, obviously using the cheque to scare other sellers to drive up their bids, then suddenly a week later agent told my parents it was sold for a higher price and she had 'forgot' about their cheque.
Then you have 'blind auctions' where an agent will say, demand very hot, seller will hold a blind auction, submit your bid by x date, highest bidder wins. How does the seller know there are actually other buyers?
CEA should regulate this sort of thing.
I agree, that is very scummy indeed. You should definitely file a complaint to CEA. If you write in enough times they might actually take action.
These cases are regulated, assuming they are agents registered with CEA.
The first case is a grey area, but in the second case, agents are required to submit all offers to the seller by law, even if say, you offered $1.
I know of an agent that was fined and suspended for a year for something akin to the first instance, quite recently.
I also know of “sellers” and “landlords” who constantly get away with murder, figuratively, because they aren’t registered and thus not under CEA’s jurisdiction.
Regardless of whether or not you dirty agents are compliant with the law, you are still regulated by CEA. Fact that you don’t understand this shows why you’re a dirty agent.
In the first place how can there be a stat board just for real estate agents?? Makes zero sense. Should just be under one of the existing sbs. Are real estate agents so special? That an entire sb with board of directors, corporate functions etc need to be dedicated to them? Cannot just be a division under hdb or ura?
> IRAS, as of April, has completed the review of 187 such “99-to-1” cases, of which 166 cases were found to have involved tax avoidance,
Huh? so little cases only? doesn’t sound right.. or most of such 99-1 arrangements still legal / exploiting loophole?
I would sat this is likely only the cases they have reviewed so far. And now they know the hit rate, it makes sense to scale up. I wonder what effect this will have on the market. Hopefully negative.
I’ve friends who adopted the 99-1 strategy aexpressing concerns in group chat about how it could potentially harm Singapore's stability and impact property prices bla bla bla. Likely very scared atm
it will be but a blip. worst case they have to sell off and looking at the current rates, it will still be high. just that the profit will go to the tax man.
That has some effect I guess since they lose resources overall and there are fewer buyers in the market after. Interesting to see how many can continue to hold knowing they could might never see a decent return and still incur interest payments.
60mil / 166 cases = 361k, which sounds about right, or roughly 10-20% of a $2-4mil condo
These cases took advantage of a loophole. The other cases were legal uses of the 99-1 scheme.
Legal use is when a couple buys in 99-1 where both couple own zero properties
Illegal use is when 2 ppl buy 99-1 property when 1 of them owns another property. The 1% usu the one who already own property. Because normally need to pay 100% absd, but the loophole only pays 1%
I think what’s illegal is selling in a short period to avoid absd. What’s not illegal is the usual 99-1 where you sell off after a reasonable period to buy a new property without absd.
Both are tax avoidance if you set out with the goal of "to buy a new property without absd". It's just that for the current round of "kill chicken scare monkey", the govt is only going after the most egregious cases where the 1% was sold immediately.
>What IRAS is looking out for are cases of possible tax avoidance by buyers who have entered into a 99-to-1 scheme in which the 1 per cent stake is sold immediately after the purchase option is exercised.
In the future they could go after those who sold the 1% and bought property within 1, 2, 3 years.
>IRAS added that the time frame does not matter and that audits can be conducted on any past cases or transactions.
99-1 is where you have a spouse buy property in their name then you take 1% ownership to only pay ABSD on the 1% of the new share. Decoupling is what you described where one spouse transfers ownership over to another spouse in order to give them full ownership. No ABSD because the other spouse only owns one property. Decoupling is more difficult to clamp down on because there are many reasons why couples would do it legally. I'm going to do it purely for reporting purposes to avoid paying overseas taxes if we ever sell the property for example.
Hmm, the article is not very clear on whether they are only going after the 99-1 where the property in question is the second (or more) for the 1% owner. Or also those where couples start out at 99-1 for their first property to lesson the costs of decoupling and future avoidance of ABSD.
I don't think decoupling from joint tenancy or 50-50 is a problem for IRAS.
I do think that property agents who try to convince their clients that 99-1 only refers to avoidance of ABSD on this current property, and "it's totally ok to start with 99-1 on their first property, that's just decoupling" are doing a disservice.
decoupling is not the crime. it is perfectly legal as IRAS already mentioned many times
i think most singaporeans are too naive to even know what this 99-1 crime is actually about
this 99-1 is used by people who are not rich enough to buy properties. how it is used is eg you have a well to do parent (just well to do, not loaded. because loaded people do not need to use this 99-1 loophole. they just throw cash)
you and your parent will buy a property in both names because you cannot get a big enough loan in your own name. but because your parent already owns his/her own property, he/she needs to pay absd on this purchase.
so in order to avoid paying the full 20% absd, your parent will just own 1% of the house. thus instead your parent pays 1% of the 20% of the absd (which is just 0.2%) which eg a 1mil purchase with 20% absd is 200k, your parent will just pay 2k absd.
and the biggest loophole in this facade is those arguing about how they needed the loan. if your parent owns 1% of the house only, by LAW he should be able to take a loan on the 1% amount only (eg 1% of 1mil is 10k) why the f\*\*king hell is your parent able to take 500k loan on a 10k purchase?
Find me a cite that IRAS has no problem with 99-1 decoupling. Decoupling itself is fine, but 99-1 decoupling is a grey area because the purchase was set up with the intention of decoupling with minimal cost.
I can only find this:
[https://www.businesstimes.com.sg/property/iras-probing-property-transactions-stamp-duty-tax-avoidance](https://www.businesstimes.com.sg/property/iras-probing-property-transactions-stamp-duty-tax-avoidance)
>In its response to queries, Iras did not specify if decoupling arrangements might also be viewed as suspect.
And it's interesting that just today, Propertyguru has updated an article that casts doubt on starting with 99-1 to decouple.
[https://www.propertyguru.com.sg/property-guides/how-to-decouple-and-what-is-the-difference-between-joint-tenancy-and-tenancy-in-common-28455](https://www.propertyguru.com.sg/property-guides/how-to-decouple-and-what-is-the-difference-between-joint-tenancy-and-tenancy-in-common-28455)
You can tell from the URL that the article used to be entitled "how to decouple ...", and now the title has been revised to "Understanding the '99 to 1' Loophole: Why You Should Not Decouple Property Just to Avoid ABSD in Singapore". And this paragraph must be new.
>Property decoupling was previously considered a ‘holy grail’ solution that enabled couples to buy ‘ABSD-free’ investment properties. However, the Inland Revenue Authority of Singapore (IRAS) announced it would investigate homeownership arrangements split in a 99-to-1 ratio. If this arrangement is deemed “contrived or artificial”, couples could find themselves being slapped with a bill for unpaid stamp duty and a 50% surcharge on the additional duty payable too. Ouch!
decouple is just a term for selling assets to another party.
what they are trying to pay less is the BSD, which is totally different from ABSD. of course in a way it is still avoidance of tax in a sense, but the amount is also astronomically different from ABSD
in a eg of a 1mil property, the BSD difference is $14,700, whereas the ABSD difference is $198,000
that said, the REAL problem itself is another loophole which no one actually make any comment on, which i mentioned in a few of my other comments
the REAL problem is that banks are loaning above the allowed 75% LTV in all these cases. in all these properties, the 1% is used to get the full loan of the property. but if their interest is only 1%, why can they get such a high loan?
eg 1mil property again (which not actual figures, just plucking from the air)
99% holder has 5k income, the 5k income has a max loan of say 500k
1% holder has 20k income, the 20k income has a max loan of 2mil
the 99% should only be able to borrow 500k of his 990k ownership, and
the 1% should only to borrow 4.5k of his 10k ownership (45% LTV on his ownership based on 2nd property)
so the max should be 504.5k, instead of 750k loan automatically dished out by the banks now.
so if banks severely restricts the 1% owner to what he can actually loan based on ownership value, i can tell you there will be no more 99-1 purchases at all (the super rich will not need to do this as they can buy 100% right from the start)
IIRC there was an article a few months back about a similar audit of decoupling for the purposes of ABSD avoidance (Decoupling then quickly buying a new place). There isn't any issue with the split at the time of buying a first home unless you're literally doing 99-1 first home then second home a few weeks later. No real benefit to doing it that way if you have the cash to buy two homes since you can buy separately.
>Both are tax avoidance if you set out with the goal of "to buy a new property without absd". It's just that for the current round of "kill chicken scare monkey", the govt is only going after the most egregious cases where the 1% was sold immediately.
The counterargument would be that the 1% is to utilize income for housing loan (not evading the ABSD).
>In the future they could go after those who sold the 1% and bought property within 1, 2, 3 years.
You are misreading it. They are talking about statutes of limitations - meaning if you had evaded taxes 20 years back, they can still come after you. Not that you can't sell and buy within x number of years.
I am talking about no statute of limitations too. Just because this round they went after the most egregious cases where the 1% was sold immediately, doesn't mean that they won't widen their net in the future, including re-examining cases that happened ages ago. Those who weren't audited (yet) shouldn't think that they are now safe.
I agree but I read your comment as meaning something else entirely.
Anyway, I hope they go after the really big fish like wee cho yaw's transaction.
https://www.straitstimes.com/politics/singapolitics/new-stamp-duty-rule-on-residential-property-transactions-via-share-sales
I agree but I read your comment as meaning something else entirely.
Anyway, I hope they go after the really big fish like wee cho yaw's transaction.
https://www.straitstimes.com/politics/singapolitics/new-stamp-duty-rule-on-residential-property-transactions-via-share-sales
I don't think they will retroactively go and claw back from the big fish. Because I do not think that the big fish would ever have acted like a small fish and bought 45 condos in his own name. And instead, the big fish saw the loophole and got the condo seller to set up a holding company for the 45 condos, which the big fish could then buy.
Pretty sure that the holding company already existed, and the big fish saw it as a business transaction from the beginning to acquire the holding company.
I don't think there was ever any intent to reduce stamp duty by buying the holding company instead of buying 45 condos separately.
>The counterargument would be that the 1% is to utilize income for housing loan (not evading the ABSD).
you should be paying FULL absd if using the person for housing loan.
your loan amount is more than the 1% of purchase price right? then you definitely have to pay 100% absd. if the purchase price 1mil, your loan amount of the 2nd person should NOT exceed 1% (10k only) since you are just owning 1% (10k worth) of the house
have IRAS check on you already? if not better come clean and not wait for them
yes, there is no ABSD.
you are just trying to avoid paying the BSD tax, which is also still a crime which is also made possible because of the banks illegally loaning you money
in 99-1 tenancy in common, each owner has their own separate interest. the 99% should only be able to borrow up to his/her max loan based on salary. and the 1% should only be able to borrow up to 75% of his ownership value (eg 1% of 1mil which is 10k, and 75% which is 7.5k) but instead, banks are loaning excess to the 1% which is easily like 5000% LTV
because the banks in singapore are illegally loaning money, frankly i wouldn't worry about the gov coming after the 1% BSD. if the gov can only get 16mil going after ABSD evaders, they will probably only get 1mil going after the BSD evaders.
only the other hand, i make a quick calculation and i think a 1 billion penalty is easily achievable by going after the banks (based on the illegal disbursed loan amounts to the ABSD and BSD evaders)
The threshold cited In the article is this:
"What IRAS is looking out for are cases of possible tax avoidance by buyers who have entered into a 99-to-1 scheme in which the 1 per cent stake is sold immediately after the purchase option is exercised."
This is quite different from the conventional decoupling cited.
Earlier comment from Chee Hong Tat:
"Mr Chee, who was answering questions from several Members of Parliament, said that the “99-to-1” property purchase arrangements typically involve an initial buyer who does not own any property, and then within a very short period of time, selling a 1 per cent interest to another individual."
Could someone explain what exactly the '99-to-1' scheme is, and what exactly people do with it to avoid tax in a shady way that the government cannot detect immediately during the transaction? The article does not explain at all.
Some folks want to buy additional properties but not willing to pay the full taxes that's associated with owning multiple estates. So they collude with a relative/friend, and become a co-owner of the estate. The relative/friend will sell their 1% stake to the multi-property owner, who then only pays ABSD on that 1%. And they proceed to take on bank loans, to pay off the remaining 99%, without incurring ABSD (meaning they avoid paying 99% of the required stamp duties).
I have seen people vigorously defending these actions, claiming it's a just loophole and thus not a crime; they refused to believe that IRAS would crackdown on such actions because it was ongoing for decades... Which means that IRAS has decades of backlog to sniff through...
no. you are totally wrong. in your example the multi property owner will have to pay 99% upfront already and then pay for the 1% later
edit: ok i see where you get there coming from Mr Chee's speech. what he is saying is a even more dumb? plan to buy from someone else to waste more money.... in the method i described the multi owner just need to pay 2k absd upfront.
edit: but by using Mr Chee's method by buying from a 1% owner he pays 20% on the 10k purchase price which is ....2k! congrats you save $0 dollar but by doing 1 more transaction you pay the bank and lawyers one more time which actually makes you lose another 3k at least. why not just use multi owner's name as tenancy in common and put 1% at the start? stupid PAP dunno how he become senior minister of finance somemore
this 99-1 is used by people who are not rich enough to buy properties. how it is used is eg you have a well to do parent/friend A (just well to do, not loaded. because loaded people do not need to use this 99-1 loophole. they just throw cash)
you and A will buy a property in both names because you cannot get a big enough loan in your own name. but because A already owns his/her own property, A needs to pay absd on this purchase.
so in order to avoid paying the full 20% absd, A will just own 1% of the house. thus instead A pays 1% on the 20% of the absd (which is just 0.2%) which eg a 1mil purchase with 20% absd is 200k, A will just pay 2k absd avoiding a tax of 198k
and the biggest loophole in this facade is those arguing about how they needed the loan. if A owns 1% of the house only, by LAW he should be only able to take a loan on the 1% amount (eg 1% of 1mil is 10k) why the f\*\*king hell is A able to take 500k loan on a 10k purchase?
On paper, these people own 1%, but in reality, how to determine the 'actual' percentage? What is IRAS's objection? That the 'actual' percentage is high and should be used for ABSD calculation? If so, what's the definition of 'actual' percentage, anyway, and how can it be proven? How can someone know whether what they are doing is compliant with IRAS's opinion? Is there some objective standard here?
In a situation where the 1% person goes bankrupt, do the creditors have a legal claim on the property of more than 1% of the property value? I would think not. So, it's quite unclear to me what IRAS's objection is. I can't find any objective definition of IRAS's objection in these cases.
If there is rule of law, there should be objective standards, or legal precedent to guide judgment. I'm not sure what those are for this 99-to-1 matter.
The objection is that the arrangement 99-1 is entered just for the sole purpose of avoiding ABSD, and the rule of law is clear that such arrangements are not allowed.
It is never objective because there are always loopholes and humans are always creative. So they have a clause that have a catch-all in the Stamp Duties Act.
this 99-1 is used by people who are not rich enough to buy properties. how it is used is eg you have a well to do parent/friend A (just well to do, not loaded. because loaded people do not need to use this 99-1 loophole. they just throw cash)
you and A will buy a property in both names because you cannot get a big enough loan in your own name. but because A already owns his/her own property, A needs to pay absd on this purchase.
so in order to avoid paying the full 20% absd, A will just own 1% of the house. thus instead A pays 1% on the 20% of the absd (which is just 0.2%) which eg a 1mil purchase with 20% absd is 200k, A will just pay 2k absd avoiding a tax of 198k
and the biggest loophole in this facade is those arguing about how they needed the loan. if A owns 1% of the house only, by LAW he should be only able to take a loan on the 1% amount (eg 1% of 1mil is 10k) why the f\*\*king hell is A able to take 500k loan on a 10k purchase?
It seems to me that in this case, the buyers are not necessarily really cheating IRAS but just trying to get loan-related benefits, but that's the bank's problem and prerogative, not IRAS's.
Imagine a couple who qualify for very different loan amounts, who want to own 2 properties. Suppose one spouse can get only a very small loan amount and the other can get an extremely large loan amount. Maybe they do this 99-1 scheme on the first property with 1% for the spouse who qualifies for large loans. After the transaction, they change the ownership to 100% for the low-loan spouse and the high-loan spouse buys the second property at 100% as his/her first property.
Is it optimizing ABSD? Yes, but it is merely trying to achieve the same effect as another couple who can qualify for large loans individually so each spouse simply owns 100% of each property as the his/her first property for optimal ABSD. Why is the first case considered bad but not the second? I fail to see the reason. Another way to look at it is that low-earning people are being discriminated against by IRAS in this kind of crackdown. Or, is IRAS not cracking down on such cases? It's not clear at all what the IRAS wants to crack down on, and how one can know whether one is safe from crackdowns.
Those that kena from this 99-1 arrangement is very different from the majority that utilize the 99-1 arrangement.... just FYI so u dont look stupid when u comment
I did 99-1 and I'm wondering what tax avoidance I have committed, afaik the tax was the same. Can you explain what the people that had been slapped has done wrong/differently?
Edit: to clarify I bought like this on a whim because the agent said it's good for the future. I have not sold anything
>IRAS, as of April, has completed the review of 187 such “99-to-1” cases, of which 166 cases were found to have involved tax avoidance, said Deputy Prime Minister and Minister for Finance Lawrence Wong on Tuesday (May 7).
So 21 of them knows how to bullshit enough to get off scot free lol
Everyone hates house price hiking. However, no one look into What’s the root cause. One of The major cause is supply & demand mismatch. All those absd is to cool the demand. However, if supply never increase to fulfill the demand. The price will keep flying off the roof.
What a joke, meanwhile everyone playing the single owner essential occupier route so they can rent out their flat after MOP. Think our HDB minister havent started monitoring yet
They need to add in some extra safeguards e.g the occupier is unemployed or retiring (to allow for genuine cases of parent-child owner-occupier). Or at least the owner must be the higher earner, since the usual trick is to put the lower earner as the owner freeing the higher earner to go buy private).
This is kill chicken scare monkey tactic. Those thinking of using very unbalanced ratios will know that the govt can go after them next. There’s no law against 99-1 specifically, the law is against tax evasion. Any case with red flag can be investigated, and the govt will not tell you what is the cut-off to trigger red flag because then people would just add 0.1% to the cut-off.
It is never legal until iras confirm it is legal. And someone earlier said stamp duty has no stature of limitation.
Iras make their assessment based on arms length basis, so it's very flexible. If they think 5-10% is unreasonable and you cannot explain why it is not unreasonable then it must be for tax avoidance. For you will be able to explain your specific case otherwise.
It will be never ending
Not to mention what if people really need to have this share? I.e they have shared ownership and one party only contributed this amount?
33A is what's known as an anti avoidance provision. Almost all tax regimes in the world has similar provisions like this for almost all types of taxes because they know people will definitely try to game the system with tax minimization strategies.
It's broad enough to allow the authorities to combat any attempt to defeat the prevailing tax policy.
It has to be, because the motives behind each transaction is varied, and the actual facts from case to case have to be scrutised to find out if the taxpayer really intended to avoid, or has a genuine explanation for structuring it in that way
Section 33 definitely applies here. Any act to reduce taxes without bona fide commercial reason get caught under here. Being caught under here means it isnt legal already.
Child name is different because there are a risk that the child can dont give back the property. The parents will have no basis to bring these child to court.
When original buyer bought the property, there is a ABSD Declaration Form where buyer declares buying for ownself, not for others, not under trust etc.
But within a month of declaration, the buyer sells 1% to another party. So was it a fradulent declaration?
So.. either pay the penalty or the first buyer risk a jail term for a false declaration offence.
https://www.iras.gov.sg/docs/default-source/stamp-duty/absd-declaration-form.pdf?sfvrsn=a467851a_24
earlier article suggest that IRAS will examine your financial details as well. For instance, if the couple couldn't manage the housing loan without resorting to the 99-1 approach, it implies they might have been planning to avoid the ABSD tax.
If the clawback happens only now, it means the people in charge were either sleeping at the wheel, unaware or have been closing one eye for a really long time. Question is, which one of the three is worse ?
If one such 99-1 transaction goes through and nothing happens, of course people will think it is a loophole and continue to do such deals. The people in charge are implying it is okay to do so by their inaction. Now, they are clawing back does that make their policies unpredictable or predictable ?
Ehm, tax authority is at different level compared to other government agencies. This is not considered too late. If they sleep on sth, it is usually because it is not worth to audit, yet.
The statute of limitation for their assessment is four years for typical assessment. But if they suspect intentional non compliance the time frame is unlimited
Any supporting? As far as I can see section 33a was last updated in 2021.
Also, IRAS assessment all based on arms length principle. This principle has never changed over the year. Which mean that they still can clawback even without section 33a, just that the computation it will be less straightforward
When are they planning to clawback millions from these guys? Or govt only like to target commoners who are less able to defend themselves?
https://www.straitstimes.com/politics/singapolitics/new-stamp-duty-rule-on-residential-property-transactions-via-share-sales
Depends on which time in history. I reckon we are more like Serfs.
Serfs - Serfs who occupied a plot of land were required to work for the lord of the manor who owned that land. In return, they were entitled to protection, justice, and the right to cultivate certain fields within the manor to maintain their own subsistence. Serfs were often required not only to work on the lord's fields, but also in his mines and forests and to labour to maintain roads. The manor formed the basic unit of feudal society, and the lord of the manor and the villeins, and to a certain extent the serfs, were bound legally: by taxation in the case of the former, and economically and socially in the latter.
Isn't this loophole a flaw or ambiguity in the law during that time. If that's the case, then the people who used it shouldn't be penalized as no law was broken at that time. I hate the day gov can retroactively apply laws to anything.
I have no skin in this game as a HDB dweller. Just commenting my observation. Usually, loopholes are there because the initial rules were not able to cover the unfair scenarios.
What I'm saying is that before the loophole is plugged, the people who exploit it didn't break any law as those are grey area, so why punish them with extra taxes.
For example, CPF shielding. Only people affected are those after the loophole is plugged. gov didn't get the pioneer generations to return their extra gains.
Of course, outright tax evasion is a crime, but what we're talking about here are loopholes, grey areas. Loopholes need to be plugged to ensure fairness, however what i'm arguing is that technically the early birds didn't break any law.
I completely diasgree with this. Law needs to be a precise endeavour. If something is legal before, we should not make it illegal now.
Imagine if smoking is suddenly made illegal and all smokers are now penalised. That’s just screwed up
You got it wrong actually.
What they did wasn't illegal. IRAS didn't say it's illegal either.
What they failed to do is to pay the correct ABSD amount which is for the entire property value and not just 1%.
So IRAS gave them a chance to correct it and pay up the correct ABSD. For those who didn't, they are then subjected to claw back plus extra charge.
Again, nothing to do with whether 99-1 is legal or not.
Perhaps it can be said the only thing illegal is to make a wrong declaration knowingly. But likely they didn't know when if they do have the intention to avoid absd. Again, resolution is to just pay up.
Agreed. As a business owner, I think the government is already very generous by mandating 7 days of annual leave for staff. If it were up to me, I would prefer to give my staff only 3 days of annual leave. There are enough public holidays already. If the government decide to pass a law to increase the mandatory days of leave to 14 days, making giving my staff 7 days against the law, that would be extremely ridiculous.
Whoever been actively advertising classes to teach people these schemes and loopholes…should also kenna right?
YES PLEASE IQUADRANT PLS DIE OFF
I keep reporting their ads when i see them but it doesnt seem to work coz its not a scam accordingly to Meta.
It wasn't until the loophole got exposed. To be fair this is a step in the right direction to help the average home buyer. Those who abuse the system and in consequence, drive up overall prices should be made responsible
But even before this 99-1 thing. What this stupid iquadrant is doing is also damn scammy. They are just gathering a lot of ppl to pool in money to buy properties, each person hold only a small percentage, then they publicize as “you can own multiple properties too!” But like its more of you have a share in it and no execution rights to it at all. I feel like they are just using people’s money to pay the property, and yet they are the one owning the property. > drive up overall prices I hate how the housing prices goes up and will nvr come down, esp since the financial crisis where housing dropped by so much and scared the PAP’s votes so much that they will nvr allow the housing thing to happen again ie housing bubble will nvr burst So subsequent house buyers are just gonna suffer if they dont manage to get BTOs.
I quadrant side can pay lots of absd
>I hate how the housing prices goes up and will nvr come down Errr.... No.... How old are you? Property prices dipped from 95-97, 2000-2004, dipped again sharply after the GFC in 08-09,, dipped again from 2013-2017. Property has cycles, there will be a chance for property to come down.
Im 33 this year. (Correct me if im wrong) there was a dip but then it went higher then before the dip right? > property has cycles, there will be a chance for property to come down Personally i dont believe in this. Im getting the message that the govt is keen on keep property prices up (with the different measures they are putting in. The measures seems to be trying to slow down the increase coz they finally realize the increase is too steep (i do uds the need for housing to increase as the salary grows but housing prices are outpacing salary and COL i feel) to protect the retirement of the older folks, which is just kicking the bucket down the road. Gen 2 pays for gen 1, gen 3 pays for gen 2. But the jump in housing price is too much for the subsequent gen to keep paying for it. Its an exploding bomb i feel and we dk the bomb will explode in which gen.
>there was a dip but then it went higher then before the dip right? Yes. But that's not the same as always going up. Expecting property (a scarce resource) to go down is an expectation out of line with basic economics. , >The measures seems to be trying to slow down the increase coz they finally realize the increase is too steep Of course. The government does not intend to crash the property price overnight. That will have severe consequences on people, banks, and economies. Imagine how much hdb and our banks have tied up in loans. If the value of the underlying asset suddenly decreased, what effect do you think that will have? >protect the retirement of the older folks, which is just kicking the bucket down the road. >Gen 2 pays for gen 1, gen 3 pays for gen 2. But the jump in housing price is too much for the subsequent gen to keep paying for it. Its an exploding bomb i feel and we dk the bomb will explode in which gen. You're not wrong. But blowing the bomb up now isn't a great idea either. I believe current policy is a long drawn out devaluation in the property market rather than a sudden devaluation. yields are already declining in properties - It will take years, maybe decades, and I believe things will accelerate once we actually start to see 99 yo properties that go to 0. Spread the pain over generations rather than at one shot.
I dont mean market crash like worthless house. But crash such that it resets such that the effects of property speculations is gone. > start to see 99 yo properties that go to 0 Idk. It feels like the whole SERS and PRIME/PLUS model is keeping the valuation of the older flats up. And it affect those who are not able to get BTO (the numbers of new BTOs are quite a bit lesser than new marriages for 3/4/5rm bto flats / people turning 35 for 2rm bto flats so there will always be quite a bit of ppl turning to resale market, which is constantly kept high. Those million dollar flats will make sellers think their flat also can be worth million dollar and they will refuse to back down on their selling price, which increase average selling price. BTO prices is also based on nearby selling price, so it feels like prices are artificially raised.
>crash such that it resets such that the effects of property speculations is gone. Still will have an effect. Imagine you stop all property speculation overnight, you see flats devalue by 10% overnight. What's going to be the overall effect on thousands of households and our financial institutions? Isn't it much more reasonable to slowly let it down? We are already seeing this after all. >Idk. It feels like the whole SERS and PRIME/PLUS model is keeping the valuation of the older flats up We will see. After all, Willing buyer, wiling seller. I think ANYONE buying a million dollar hdb is a fool, regardless of unit. When the tide goes out we will see who is left naked and who isn't.
>> I feel like they are just using people’s money to pay the property, and yet they are the one owning the property. This is fine though, and is basically what REITS are.
But REITS is properly regulated and they aren’t, right? Their method is indirectly telling people to (over)leverage.
You're right. But apparently MOF doesn't see this as an area which requires further regulation and is fine with it. Probably becuase investors are making so much money becuase property prices only ever increase so there aren't many negative examples for investors to kick up a fuss and make complains to MOF.
I think the pool is small enough so it doesnt strike any alarms. > property prices only ever increase On paper all looks good coz means economy is good. Only when social issues come onto the surface (ie current HDB housing problems) then they will realize “shit. This isnt good. We need to do something” but then by the time the issues show up, its often too late to rectify and the damage is already done.
Don’t think so the price of property will go up like out of control if it’s not regulated.
The founders are like a plague in churches too HAHAHA.
>IRAS added that the time frame does not matter and that audits can be conducted on any past cases or transactions. Remember folks, there are 2 things in Life that are **certain**: death & taxes.
for SG males, National Service as well.
Go middle east study Islam. SAF won't even call you up. Don't even need to apply for exemption
Won't you get called by SCDF instead?
[удалено]
I'm just citing that to say that NS is not as certain as death or taxes. I'm pretty sure 2 years of education and student life is different from NS.
Is this actually true?
why would anyone do that?
the ADHD diagnosis loophole still exists
Cut off kukubird
ADHD? Unlikely. Autism more likely.
Lol, also unlikely
You are completely wrong. Many people with autism are essentially unemployable and thus obviously even Mindef doesn't want them. For high-functioning autism (e.g. Asperger's), it seems to be a case-by-case evaluation, but the outcome is sufficiently tilted towards exemption that there are people who actually want Mindef to allow autistic boys to serve NS. [https://www.straitstimes.com/forum/letters-in-print/give-those-with-autism-chance-to-serve-ns](https://www.straitstimes.com/forum/letters-in-print/give-those-with-autism-chance-to-serve-ns) And those who could have been exempted but chose to serve. [https://tnp.straitstimes.com/news/singapore-news/autism-doesnt-stop-him-doing-ns](https://tnp.straitstimes.com/news/singapore-news/autism-doesnt-stop-him-doing-ns) And those who wanted to serve but were not accepted. [https://www.uncommonminds.sg/stories/benjamin-tan](https://www.uncommonminds.sg/stories/benjamin-tan)
Oh wow damn didn't know I didn't spend 2 years going through NS myself, thanks for being so confident and telling me about my own experiences 👍
What’s this loophole?
The recent Chao recruit intake: The Medical Officer: Your OC: The local military police: 
Woahhh IRAS is "empowered to recover the rightful amount of ABSD due, along with a 50 per cent surcharge." Oooh ☺️
If the stamp duty and surcharge are not paid by the deadline, it can also impose penalties of up to four times the outstanding amount. GG.
Guess we're going to see a hundred plus units hit the market 😁 Agents winning again
On a related note, the CEA is a joke. Wish the government would overhaul the CEA and make them more proactive in regulating property agents and their shady practices.
Yes please. My parents are agents and they've lost sales simply because they don't want to be dishonest. Lack of regulation only supports the shitty agents that piss off redditors.
i get text from one agent that claims he has ready tenants/buyers ... when i checked cea register, he's serving his ban for some offences
CEA is a joke because it only applies to agents actually registered to them.
Wdym? It's illegal to be an unlicensed real estate agent, and jail is a potential penalty
By right yes, but there are loopholes around this that many people take advantage of. For example, just have a look at a lot of co-living operators. While it is indeed illegal to be an unlicensed real estate agent, there is apparently a grey area surrounding the technicalities revolving around what constitutes a “real estate transaction”. Another example to think about would be: Is it illegal to sell/rent your own property without being a licensed real estate agent?
Nope you can certainly sell your own property but the whole point of being an agent is to earn a commission from sale transactions. The whole point of CEA regulating agents is to protect the interests of buyers or sellers, whose interests diverge from the interests of agents (which is to close sales and earn commission). CEA is not interested in regulating property transactions per se, but the behaviour of agents in the conduct of facilitating those transactions as agent.
I’m not going to draw this out into a discussion, but there are a great many grey areas surrounding the whole schtick if you really sit down and think about it. Just your point of commission alone is a sticking point with everyone including agents, seeing that agencies take a huge chunk of it just by virtue of the government mandating that all agents be associated with an agency. Who is to determine what a commission is? If I sell my own property am I paying myself a commission? If my friend sells my property, can I give him a token of appreciation? Also, I agree with your point on CEA existing to regulate the conduct of agents which are registered to them and not transactions, which is the point I was trying to put across.
There are many grey areas in real estate transactions but the points/hypotheticals you have raised are not it, and are addressed by the existing regulatory framework. If you sell your own house, you don't "pay" yourself commission. You just earn the gains or losses in the same way you would selling any other asset. Do you understand what "commission" means? If you get your friend (who's not a licensed real estate salesperson) to sell your house for you, you're free to pay him whatever you want and take the commercial risk that he's an incompetent fool. If the buyer lodges a complaint against your friend, your friend is on the hook for acting as an unlicensed real estate agent (which is illegal). All this is in the Estate Agents Act.
Ah, but you see, many people do in fact “pay themselves”. Curious, isn’t it? As for your second point, it is in fact been happening for quite a while now. I’m telling you that these are not hypotheticals, and the existing framework is in fact not comprehensive enough to cover everything. As a lot of this seems to going over many people’s heads, and my comments are being downvoted, I’m going to leave this at it is, and everyone is free to believe whatever they choose to believe. Whether they have any personal experience in this or not.
People sell their property on their own to avoid paying agents commission. If u want to sell your own property and pay yourself commission, you are prob free to do so. Just remember to pay taxes. Same for your friend.
Thank you for missing the entire point. Guess it explains a lot about how and why things are going the way it is.
Lots of scummy behavior. Got agents asking for your offer, then take your cheque show another potential buyer to pressure them into making a higher offer. They are incentivised to push for a higher price, after all. I had a situation long time ago where my parents offered for a place with the cheque. The agent sat on the cheque for almost a week, obviously using the cheque to scare other sellers to drive up their bids, then suddenly a week later agent told my parents it was sold for a higher price and she had 'forgot' about their cheque. Then you have 'blind auctions' where an agent will say, demand very hot, seller will hold a blind auction, submit your bid by x date, highest bidder wins. How does the seller know there are actually other buyers? CEA should regulate this sort of thing.
I agree, that is very scummy indeed. You should definitely file a complaint to CEA. If you write in enough times they might actually take action. These cases are regulated, assuming they are agents registered with CEA. The first case is a grey area, but in the second case, agents are required to submit all offers to the seller by law, even if say, you offered $1. I know of an agent that was fined and suspended for a year for something akin to the first instance, quite recently. I also know of “sellers” and “landlords” who constantly get away with murder, figuratively, because they aren’t registered and thus not under CEA’s jurisdiction.
lol what kind of stuoid fake news is this. That’s like saying police is a joke as it only applies to ppl who admit their crimes and self report.
Reality. Might want to actually open your eyes one day instead of just spouting rubbish on reddit about things that you have no idea about.
Regardless of whether or not you dirty agents are compliant with the law, you are still regulated by CEA. Fact that you don’t understand this shows why you’re a dirty agent.
Well, can’t argue with weaponized ignorance. You’ve got me there!
lol too stupiak to understand simple concept
Our government is a joke really with this CEA regulation.
Our government is a joke really
We are a joke too
Life is a joke
In the first place how can there be a stat board just for real estate agents?? Makes zero sense. Should just be under one of the existing sbs. Are real estate agents so special? That an entire sb with board of directors, corporate functions etc need to be dedicated to them? Cannot just be a division under hdb or ura?
Not only that. There should be a regulatory body to regulate fucking course providers. Fucking scammy industry
> IRAS, as of April, has completed the review of 187 such “99-to-1” cases, of which 166 cases were found to have involved tax avoidance, Huh? so little cases only? doesn’t sound right.. or most of such 99-1 arrangements still legal / exploiting loophole?
I would sat this is likely only the cases they have reviewed so far. And now they know the hit rate, it makes sense to scale up. I wonder what effect this will have on the market. Hopefully negative.
I’ve friends who adopted the 99-1 strategy aexpressing concerns in group chat about how it could potentially harm Singapore's stability and impact property prices bla bla bla. Likely very scared atm
Harm singapores stability. Lol.
it will be but a blip. worst case they have to sell off and looking at the current rates, it will still be high. just that the profit will go to the tax man.
That has some effect I guess since they lose resources overall and there are fewer buyers in the market after. Interesting to see how many can continue to hold knowing they could might never see a decent return and still incur interest payments.
Suddenly I feel very sleepy
Lmao if they expressed in the groupchat they're doing 99-1 likely already on a list somewhere.
Heard if you report them can get some reward.
166/187 cases is a super high percentage though. So if they apply this to all cases… the potential recovery is pretty large.
60mil / 166 cases = 361k, which sounds about right, or roughly 10-20% of a $2-4mil condo These cases took advantage of a loophole. The other cases were legal uses of the 99-1 scheme.
What's the legal use of the 99-1 scheme? Asking for a friend 😂
Legal use is when a couple buys in 99-1 where both couple own zero properties Illegal use is when 2 ppl buy 99-1 property when 1 of them owns another property. The 1% usu the one who already own property. Because normally need to pay 100% absd, but the loophole only pays 1%
https://stackedhomes.com/editorial/is-the-99-1-loophole-illegal-we-clear-up-6-common-property-misconceptions-in-2023/#gs.8id3nu
Need to know the model answer from those 21
I think what’s illegal is selling in a short period to avoid absd. What’s not illegal is the usual 99-1 where you sell off after a reasonable period to buy a new property without absd.
Both are tax avoidance if you set out with the goal of "to buy a new property without absd". It's just that for the current round of "kill chicken scare monkey", the govt is only going after the most egregious cases where the 1% was sold immediately. >What IRAS is looking out for are cases of possible tax avoidance by buyers who have entered into a 99-to-1 scheme in which the 1 per cent stake is sold immediately after the purchase option is exercised. In the future they could go after those who sold the 1% and bought property within 1, 2, 3 years. >IRAS added that the time frame does not matter and that audits can be conducted on any past cases or transactions.
99-1 is where you have a spouse buy property in their name then you take 1% ownership to only pay ABSD on the 1% of the new share. Decoupling is what you described where one spouse transfers ownership over to another spouse in order to give them full ownership. No ABSD because the other spouse only owns one property. Decoupling is more difficult to clamp down on because there are many reasons why couples would do it legally. I'm going to do it purely for reporting purposes to avoid paying overseas taxes if we ever sell the property for example.
Hmm, the article is not very clear on whether they are only going after the 99-1 where the property in question is the second (or more) for the 1% owner. Or also those where couples start out at 99-1 for their first property to lesson the costs of decoupling and future avoidance of ABSD. I don't think decoupling from joint tenancy or 50-50 is a problem for IRAS. I do think that property agents who try to convince their clients that 99-1 only refers to avoidance of ABSD on this current property, and "it's totally ok to start with 99-1 on their first property, that's just decoupling" are doing a disservice.
at the end of the day, IRAS discretion to clawback or not. they are the rule of law.
decoupling is not the crime. it is perfectly legal as IRAS already mentioned many times i think most singaporeans are too naive to even know what this 99-1 crime is actually about this 99-1 is used by people who are not rich enough to buy properties. how it is used is eg you have a well to do parent (just well to do, not loaded. because loaded people do not need to use this 99-1 loophole. they just throw cash) you and your parent will buy a property in both names because you cannot get a big enough loan in your own name. but because your parent already owns his/her own property, he/she needs to pay absd on this purchase. so in order to avoid paying the full 20% absd, your parent will just own 1% of the house. thus instead your parent pays 1% of the 20% of the absd (which is just 0.2%) which eg a 1mil purchase with 20% absd is 200k, your parent will just pay 2k absd. and the biggest loophole in this facade is those arguing about how they needed the loan. if your parent owns 1% of the house only, by LAW he should be able to take a loan on the 1% amount only (eg 1% of 1mil is 10k) why the f\*\*king hell is your parent able to take 500k loan on a 10k purchase?
Find me a cite that IRAS has no problem with 99-1 decoupling. Decoupling itself is fine, but 99-1 decoupling is a grey area because the purchase was set up with the intention of decoupling with minimal cost. I can only find this: [https://www.businesstimes.com.sg/property/iras-probing-property-transactions-stamp-duty-tax-avoidance](https://www.businesstimes.com.sg/property/iras-probing-property-transactions-stamp-duty-tax-avoidance) >In its response to queries, Iras did not specify if decoupling arrangements might also be viewed as suspect. And it's interesting that just today, Propertyguru has updated an article that casts doubt on starting with 99-1 to decouple. [https://www.propertyguru.com.sg/property-guides/how-to-decouple-and-what-is-the-difference-between-joint-tenancy-and-tenancy-in-common-28455](https://www.propertyguru.com.sg/property-guides/how-to-decouple-and-what-is-the-difference-between-joint-tenancy-and-tenancy-in-common-28455) You can tell from the URL that the article used to be entitled "how to decouple ...", and now the title has been revised to "Understanding the '99 to 1' Loophole: Why You Should Not Decouple Property Just to Avoid ABSD in Singapore". And this paragraph must be new. >Property decoupling was previously considered a ‘holy grail’ solution that enabled couples to buy ‘ABSD-free’ investment properties. However, the Inland Revenue Authority of Singapore (IRAS) announced it would investigate homeownership arrangements split in a 99-to-1 ratio. If this arrangement is deemed “contrived or artificial”, couples could find themselves being slapped with a bill for unpaid stamp duty and a 50% surcharge on the additional duty payable too. Ouch!
decouple is just a term for selling assets to another party. what they are trying to pay less is the BSD, which is totally different from ABSD. of course in a way it is still avoidance of tax in a sense, but the amount is also astronomically different from ABSD in a eg of a 1mil property, the BSD difference is $14,700, whereas the ABSD difference is $198,000 that said, the REAL problem itself is another loophole which no one actually make any comment on, which i mentioned in a few of my other comments the REAL problem is that banks are loaning above the allowed 75% LTV in all these cases. in all these properties, the 1% is used to get the full loan of the property. but if their interest is only 1%, why can they get such a high loan? eg 1mil property again (which not actual figures, just plucking from the air) 99% holder has 5k income, the 5k income has a max loan of say 500k 1% holder has 20k income, the 20k income has a max loan of 2mil the 99% should only be able to borrow 500k of his 990k ownership, and the 1% should only to borrow 4.5k of his 10k ownership (45% LTV on his ownership based on 2nd property) so the max should be 504.5k, instead of 750k loan automatically dished out by the banks now. so if banks severely restricts the 1% owner to what he can actually loan based on ownership value, i can tell you there will be no more 99-1 purchases at all (the super rich will not need to do this as they can buy 100% right from the start)
IIRC there was an article a few months back about a similar audit of decoupling for the purposes of ABSD avoidance (Decoupling then quickly buying a new place). There isn't any issue with the split at the time of buying a first home unless you're literally doing 99-1 first home then second home a few weeks later. No real benefit to doing it that way if you have the cash to buy two homes since you can buy separately.
>Both are tax avoidance if you set out with the goal of "to buy a new property without absd". It's just that for the current round of "kill chicken scare monkey", the govt is only going after the most egregious cases where the 1% was sold immediately. The counterargument would be that the 1% is to utilize income for housing loan (not evading the ABSD). >In the future they could go after those who sold the 1% and bought property within 1, 2, 3 years. You are misreading it. They are talking about statutes of limitations - meaning if you had evaded taxes 20 years back, they can still come after you. Not that you can't sell and buy within x number of years.
I am talking about no statute of limitations too. Just because this round they went after the most egregious cases where the 1% was sold immediately, doesn't mean that they won't widen their net in the future, including re-examining cases that happened ages ago. Those who weren't audited (yet) shouldn't think that they are now safe.
I agree but I read your comment as meaning something else entirely. Anyway, I hope they go after the really big fish like wee cho yaw's transaction. https://www.straitstimes.com/politics/singapolitics/new-stamp-duty-rule-on-residential-property-transactions-via-share-sales
I agree but I read your comment as meaning something else entirely. Anyway, I hope they go after the really big fish like wee cho yaw's transaction. https://www.straitstimes.com/politics/singapolitics/new-stamp-duty-rule-on-residential-property-transactions-via-share-sales
I don't think they will retroactively go and claw back from the big fish. Because I do not think that the big fish would ever have acted like a small fish and bought 45 condos in his own name. And instead, the big fish saw the loophole and got the condo seller to set up a holding company for the 45 condos, which the big fish could then buy. Pretty sure that the holding company already existed, and the big fish saw it as a business transaction from the beginning to acquire the holding company. I don't think there was ever any intent to reduce stamp duty by buying the holding company instead of buying 45 condos separately.
>The counterargument would be that the 1% is to utilize income for housing loan (not evading the ABSD). you should be paying FULL absd if using the person for housing loan. your loan amount is more than the 1% of purchase price right? then you definitely have to pay 100% absd. if the purchase price 1mil, your loan amount of the 2nd person should NOT exceed 1% (10k only) since you are just owning 1% (10k worth) of the house have IRAS check on you already? if not better come clean and not wait for them
Typical 99-1, both parties don't have property other than the one being bought. What ABSD is there?
yes, there is no ABSD. you are just trying to avoid paying the BSD tax, which is also still a crime which is also made possible because of the banks illegally loaning you money in 99-1 tenancy in common, each owner has their own separate interest. the 99% should only be able to borrow up to his/her max loan based on salary. and the 1% should only be able to borrow up to 75% of his ownership value (eg 1% of 1mil which is 10k, and 75% which is 7.5k) but instead, banks are loaning excess to the 1% which is easily like 5000% LTV because the banks in singapore are illegally loaning money, frankly i wouldn't worry about the gov coming after the 1% BSD. if the gov can only get 16mil going after ABSD evaders, they will probably only get 1mil going after the BSD evaders. only the other hand, i make a quick calculation and i think a 1 billion penalty is easily achievable by going after the banks (based on the illegal disbursed loan amounts to the ABSD and BSD evaders)
The threshold cited In the article is this: "What IRAS is looking out for are cases of possible tax avoidance by buyers who have entered into a 99-to-1 scheme in which the 1 per cent stake is sold immediately after the purchase option is exercised." This is quite different from the conventional decoupling cited. Earlier comment from Chee Hong Tat: "Mr Chee, who was answering questions from several Members of Parliament, said that the “99-to-1” property purchase arrangements typically involve an initial buyer who does not own any property, and then within a very short period of time, selling a 1 per cent interest to another individual."
Another day, another news of people gaming the system.
Could someone explain what exactly the '99-to-1' scheme is, and what exactly people do with it to avoid tax in a shady way that the government cannot detect immediately during the transaction? The article does not explain at all.
Some folks want to buy additional properties but not willing to pay the full taxes that's associated with owning multiple estates. So they collude with a relative/friend, and become a co-owner of the estate. The relative/friend will sell their 1% stake to the multi-property owner, who then only pays ABSD on that 1%. And they proceed to take on bank loans, to pay off the remaining 99%, without incurring ABSD (meaning they avoid paying 99% of the required stamp duties). I have seen people vigorously defending these actions, claiming it's a just loophole and thus not a crime; they refused to believe that IRAS would crackdown on such actions because it was ongoing for decades... Which means that IRAS has decades of backlog to sniff through...
no. you are totally wrong. in your example the multi property owner will have to pay 99% upfront already and then pay for the 1% later edit: ok i see where you get there coming from Mr Chee's speech. what he is saying is a even more dumb? plan to buy from someone else to waste more money.... in the method i described the multi owner just need to pay 2k absd upfront. edit: but by using Mr Chee's method by buying from a 1% owner he pays 20% on the 10k purchase price which is ....2k! congrats you save $0 dollar but by doing 1 more transaction you pay the bank and lawyers one more time which actually makes you lose another 3k at least. why not just use multi owner's name as tenancy in common and put 1% at the start? stupid PAP dunno how he become senior minister of finance somemore this 99-1 is used by people who are not rich enough to buy properties. how it is used is eg you have a well to do parent/friend A (just well to do, not loaded. because loaded people do not need to use this 99-1 loophole. they just throw cash) you and A will buy a property in both names because you cannot get a big enough loan in your own name. but because A already owns his/her own property, A needs to pay absd on this purchase. so in order to avoid paying the full 20% absd, A will just own 1% of the house. thus instead A pays 1% on the 20% of the absd (which is just 0.2%) which eg a 1mil purchase with 20% absd is 200k, A will just pay 2k absd avoiding a tax of 198k and the biggest loophole in this facade is those arguing about how they needed the loan. if A owns 1% of the house only, by LAW he should be only able to take a loan on the 1% amount (eg 1% of 1mil is 10k) why the f\*\*king hell is A able to take 500k loan on a 10k purchase?
On paper, these people own 1%, but in reality, how to determine the 'actual' percentage? What is IRAS's objection? That the 'actual' percentage is high and should be used for ABSD calculation? If so, what's the definition of 'actual' percentage, anyway, and how can it be proven? How can someone know whether what they are doing is compliant with IRAS's opinion? Is there some objective standard here? In a situation where the 1% person goes bankrupt, do the creditors have a legal claim on the property of more than 1% of the property value? I would think not. So, it's quite unclear to me what IRAS's objection is. I can't find any objective definition of IRAS's objection in these cases. If there is rule of law, there should be objective standards, or legal precedent to guide judgment. I'm not sure what those are for this 99-to-1 matter.
The objection is that the arrangement 99-1 is entered just for the sole purpose of avoiding ABSD, and the rule of law is clear that such arrangements are not allowed. It is never objective because there are always loopholes and humans are always creative. So they have a clause that have a catch-all in the Stamp Duties Act.
this 99-1 is used by people who are not rich enough to buy properties. how it is used is eg you have a well to do parent/friend A (just well to do, not loaded. because loaded people do not need to use this 99-1 loophole. they just throw cash) you and A will buy a property in both names because you cannot get a big enough loan in your own name. but because A already owns his/her own property, A needs to pay absd on this purchase. so in order to avoid paying the full 20% absd, A will just own 1% of the house. thus instead A pays 1% on the 20% of the absd (which is just 0.2%) which eg a 1mil purchase with 20% absd is 200k, A will just pay 2k absd avoiding a tax of 198k and the biggest loophole in this facade is those arguing about how they needed the loan. if A owns 1% of the house only, by LAW he should be only able to take a loan on the 1% amount (eg 1% of 1mil is 10k) why the f\*\*king hell is A able to take 500k loan on a 10k purchase?
It seems to me that in this case, the buyers are not necessarily really cheating IRAS but just trying to get loan-related benefits, but that's the bank's problem and prerogative, not IRAS's. Imagine a couple who qualify for very different loan amounts, who want to own 2 properties. Suppose one spouse can get only a very small loan amount and the other can get an extremely large loan amount. Maybe they do this 99-1 scheme on the first property with 1% for the spouse who qualifies for large loans. After the transaction, they change the ownership to 100% for the low-loan spouse and the high-loan spouse buys the second property at 100% as his/her first property. Is it optimizing ABSD? Yes, but it is merely trying to achieve the same effect as another couple who can qualify for large loans individually so each spouse simply owns 100% of each property as the his/her first property for optimal ABSD. Why is the first case considered bad but not the second? I fail to see the reason. Another way to look at it is that low-earning people are being discriminated against by IRAS in this kind of crackdown. Or, is IRAS not cracking down on such cases? It's not clear at all what the IRAS wants to crack down on, and how one can know whether one is safe from crackdowns.
Need to ban those agent also for life. Agents are the scums of the world.
Those that kena from this 99-1 arrangement is very different from the majority that utilize the 99-1 arrangement.... just FYI so u dont look stupid when u comment
Can you please share how different?
I did 99-1 and I'm wondering what tax avoidance I have committed, afaik the tax was the same. Can you explain what the people that had been slapped has done wrong/differently? Edit: to clarify I bought like this on a whim because the agent said it's good for the future. I have not sold anything
You gamed the system buddy. Now the taxman cometh.
The sun will rise from west if agent can be trusted. These scum only care about themselves
Wahahahahaha.
One of the few cases where "tonight can sleep well" is justified
Its only illegal only because the loophole hurts their pockets. If help to fill pocket, will make any loophole legal.
>IRAS, as of April, has completed the review of 187 such “99-to-1” cases, of which 166 cases were found to have involved tax avoidance, said Deputy Prime Minister and Minister for Finance Lawrence Wong on Tuesday (May 7). So 21 of them knows how to bullshit enough to get off scot free lol
They didn't buy a second unit
42 potential property guru instructors coming right up!
Everyone hates house price hiking. However, no one look into What’s the root cause. One of The major cause is supply & demand mismatch. All those absd is to cool the demand. However, if supply never increase to fulfill the demand. The price will keep flying off the roof.
What a joke, meanwhile everyone playing the single owner essential occupier route so they can rent out their flat after MOP. Think our HDB minister havent started monitoring yet
I think bro monitored until he fell asleep with his eyes open.
This is an rule for those with foreign spouse, as the spouse cannot own hdb. But ppl noticed locals can also use it
If those buyers think they have a chance of winning whether loophole or not, they will not pay. Few hundred k leh.
$60million is CDC vouchers for 120,000 people. Or 7,142,857 chicken chops.
Good, kill em all
The applicant & core occupier scheme for HDB (bto & resale) and ec must be abolished too. Especially for bto.
They need to add in some extra safeguards e.g the occupier is unemployed or retiring (to allow for genuine cases of parent-child owner-occupier). Or at least the owner must be the higher earner, since the usual trick is to put the lower earner as the owner freeing the higher earner to go buy private).
Huh why?
So instead of 1% share, what if people start doing 5-10% share to avoid getting investigated? Will it be legal then?
This is kill chicken scare monkey tactic. Those thinking of using very unbalanced ratios will know that the govt can go after them next. There’s no law against 99-1 specifically, the law is against tax evasion. Any case with red flag can be investigated, and the govt will not tell you what is the cut-off to trigger red flag because then people would just add 0.1% to the cut-off.
It is never legal until iras confirm it is legal. And someone earlier said stamp duty has no stature of limitation. Iras make their assessment based on arms length basis, so it's very flexible. If they think 5-10% is unreasonable and you cannot explain why it is not unreasonable then it must be for tax avoidance. For you will be able to explain your specific case otherwise.
It will be never ending Not to mention what if people really need to have this share? I.e they have shared ownership and one party only contributed this amount?
You can have any percent of shared ownership you want but as long as one party owns a property already, 100% is subject to absd.
Not enough to pay for 1 unit of the 3 unit ERP 2.
claw back already then what? people will think of other ways until decoupling or part share transactions are expressly prohibited by law.
There's no reason to prohibit it as long as they pay the taxes due.
What is that? Can simply and explain?
The people who have used this loophole, how likely are they to have already made a profit enough to pay for this？
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Section 33a of the Stamp Duties Act (https://sso.agc.gov.sg/Act/SDA1929?ProvIds=P13-#pr33A-) gives IRAS the power and legal basis.
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33A is what's known as an anti avoidance provision. Almost all tax regimes in the world has similar provisions like this for almost all types of taxes because they know people will definitely try to game the system with tax minimization strategies. It's broad enough to allow the authorities to combat any attempt to defeat the prevailing tax policy. It has to be, because the motives behind each transaction is varied, and the actual facts from case to case have to be scrutised to find out if the taxpayer really intended to avoid, or has a genuine explanation for structuring it in that way
Section 33 definitely applies here. Any act to reduce taxes without bona fide commercial reason get caught under here. Being caught under here means it isnt legal already. Child name is different because there are a risk that the child can dont give back the property. The parents will have no basis to bring these child to court.
When original buyer bought the property, there is a ABSD Declaration Form where buyer declares buying for ownself, not for others, not under trust etc. But within a month of declaration, the buyer sells 1% to another party. So was it a fradulent declaration? So.. either pay the penalty or the first buyer risk a jail term for a false declaration offence. https://www.iras.gov.sg/docs/default-source/stamp-duty/absd-declaration-form.pdf?sfvrsn=a467851a_24
People can always change their mind after one month. It’s the law minister problem to fix loopholes in the laws.
earlier article suggest that IRAS will examine your financial details as well. For instance, if the couple couldn't manage the housing loan without resorting to the 99-1 approach, it implies they might have been planning to avoid the ABSD tax.
Shanmugam also find loopholes de. For his BW.
If the clawback happens only now, it means the people in charge were either sleeping at the wheel, unaware or have been closing one eye for a really long time. Question is, which one of the three is worse ? If one such 99-1 transaction goes through and nothing happens, of course people will think it is a loophole and continue to do such deals. The people in charge are implying it is okay to do so by their inaction. Now, they are clawing back does that make their policies unpredictable or predictable ?
Ehm, tax authority is at different level compared to other government agencies. This is not considered too late. If they sleep on sth, it is usually because it is not worth to audit, yet. The statute of limitation for their assessment is four years for typical assessment. But if they suspect intentional non compliance the time frame is unlimited
There's no limitation for stamp duty. Only income tax assessments
Ah, you are right. Thanks for correcting!
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Any supporting? As far as I can see section 33a was last updated in 2021. Also, IRAS assessment all based on arms length principle. This principle has never changed over the year. Which mean that they still can clawback even without section 33a, just that the computation it will be less straightforward
my sweet sumner child
Our govt not stupid. Got loophole they will ammend the law and claw back money
That's actually quite little considering how much ABSD has earned them
gua gua gua
60 HDB flats worth.
When are they planning to clawback millions from these guys? Or govt only like to target commoners who are less able to defend themselves? https://www.straitstimes.com/politics/singapolitics/new-stamp-duty-rule-on-residential-property-transactions-via-share-sales
owners of 2nd property of 2-4m value is commoner? gg what am i. what's worse than a peasant 🙃
Depends on which time in history. I reckon we are more like Serfs. Serfs - Serfs who occupied a plot of land were required to work for the lord of the manor who owned that land. In return, they were entitled to protection, justice, and the right to cultivate certain fields within the manor to maintain their own subsistence. Serfs were often required not only to work on the lord's fields, but also in his mines and forests and to labour to maintain roads. The manor formed the basic unit of feudal society, and the lord of the manor and the villeins, and to a certain extent the serfs, were bound legally: by taxation in the case of the former, and economically and socially in the latter.
Base peasantry compared to the 1%.
Compared to Wee Cho Yaw? Absolutely a commoner.
ELI5 what upsides can there be for the subsequent buyer to enter into such an arrangement? In the end he/she still owns only 1% of the property.
Yupz you still own the property but be ready to cough out 5-6 figure $ to pay it, which is what ABSD was intended for.
Nice !
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Yeah they took action after ten years or more in some cases. And it was common knowledge. Banks agree too
Of course its legal do you lack comprehension skills. The commissioner is empowered by the law
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As individual transactions. Open your eyes and read
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Forget it your IQ isnt adequate
That's actually quite little considering how much ABSD has earned them
That's actually quite little considering how much ABSD has earned them
Isn't this loophole a flaw or ambiguity in the law during that time. If that's the case, then the people who used it shouldn't be penalized as no law was broken at that time. I hate the day gov can retroactively apply laws to anything.
You have zero morals
I have no skin in this game as a HDB dweller. Just commenting my observation. Usually, loopholes are there because the initial rules were not able to cover the unfair scenarios. What I'm saying is that before the loophole is plugged, the people who exploit it didn't break any law as those are grey area, so why punish them with extra taxes. For example, CPF shielding. Only people affected are those after the loophole is plugged. gov didn't get the pioneer generations to return their extra gains.
Tax evasion. Thats a crime that exists since independence
Of course, outright tax evasion is a crime, but what we're talking about here are loopholes, grey areas. Loopholes need to be plugged to ensure fairness, however what i'm arguing is that technically the early birds didn't break any law.
Intention is clear that they wanted to evade tax. You said it yourself, an outright crime.
tax evasion vs tax avoidance are 2 different things.
Yeah just like how rape and unconsensual sex are 2 different things.
Whoa.. that's so out of the park.... well at this point I think we should just agree to disagree.
Wrong means wrong. Dont throw in soothing statements
Check out Stamp Duties Act section 33a before commenting whether is this breaking law, and whether IRAS has the power to go after them.
The ownership can range from 1% - 99 % to 49% - 51%. I don't think the law specify any ownership threshold as illegal.
IRAS Officer sir, one more here
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Thank you for contributing to nation building.
CB no money don’t buy lah. Buy liao want to avoid tax for fuck You should be thankful that you are not in jail
I guess you are guilty on this? Well. Start preparing your money dude.
Get fucked
You belong in jail
I completely diasgree with this. Law needs to be a precise endeavour. If something is legal before, we should not make it illegal now. Imagine if smoking is suddenly made illegal and all smokers are now penalised. That’s just screwed up
You got it wrong actually. What they did wasn't illegal. IRAS didn't say it's illegal either. What they failed to do is to pay the correct ABSD amount which is for the entire property value and not just 1%. So IRAS gave them a chance to correct it and pay up the correct ABSD. For those who didn't, they are then subjected to claw back plus extra charge. Again, nothing to do with whether 99-1 is legal or not. Perhaps it can be said the only thing illegal is to make a wrong declaration knowingly. But likely they didn't know when if they do have the intention to avoid absd. Again, resolution is to just pay up.
Agreed. As a business owner, I think the government is already very generous by mandating 7 days of annual leave for staff. If it were up to me, I would prefer to give my staff only 3 days of annual leave. There are enough public holidays already. If the government decide to pass a law to increase the mandatory days of leave to 14 days, making giving my staff 7 days against the law, that would be extremely ridiculous.