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TOPICS OF THE DAY:

•What is part purchase / decoupling?
• Stamp duty in respect of part purchase / decoupling
• Buyer’s Stamp Duty and Additional Buyer’s Stamp Duty
• Seller’s Stamp Duty
• Procedure
• Potential PitfallsWhat is Part Purchase / Decoupling?

What is Part Purchase / Decoupling?
• A part purchase is where there are multiple owners to a property, and
one of the owners buys over the share of the other owner(s)
• Decoupling is where there is a husband-wife relationship between the
two owners of the property, hence “de-couple-ing”
• Decoupling is essentially a specific form of part purchaseStamp Duty in a
Part Purchase / DecouplingStamp Duty: Same Rules Apply
Stamp duty is payable in a part purchase; the same rules apply. The
stamp duty (including Buyer’s Stamp Duty, Additional Buyer’s Stamp
Duty and Seller’s Stamp Duty) is determined by:-
• The valuation price; and
• The share in the property transferred
NB: Stamp duty is payable even for transfers by way of a giftProcedureProcedure: Encumbrances
CPF monies
• If CPF monies were used in the purchase, it needs to be refunded to
the CPF account of the seller/transfer or existing mortgage
• As banks usually require notice of 3 months for redemption, interest
in lieu of notice usually needs to be paid
• To decide completion date carefully as there may be pre-payment
penalties involved

Procedure: Timelines
Drafting of Sale and Purchase Agreement (around 3 days). We require:-
• NRICs/ Passports of all parties;
• Address of property; and
• Valuation report
Completion:-
• If bank loan and/or CPF funds are required to buy over the share: 8 to 12
weeks
• If no bank loan and no CPF funds are required to buy over the share: 2
weeks (the purchaser must have the funds to pay for 95% of the share)Procedure:
Other things to note
How much deposit needs to be paid?
• Usually 5% of the purchase price
• May be paid directly to the seller without going through the lawyers
When can the seller purchase another property (for the purposes of ABSD)?
• The date of the S&P is the date that the seller is deemed to have sold the
property. Thus, upon signing the S&P, he can go ahead and purchase
another property
• However, if the seller is using CPF funds to finance the new purchase, then
completion of the part purchase must take place at least 3 weeks before
payment of CPF for new purchase (e.g. either for 15% in BUC, or
completion)

Illustration
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Potential Pitfalls
There are a few issues to consider when de-coupling:-
• Bankruptcy
• Divorce of married couple

Potential Pitfalls:
Bankruptcy Issue
Under the Bankruptcy Act, if:-
• an individual enters into a transaction at an undervalue, or if he makes a gift (section 98)
• for a 5 year period (section 100)
• the transaction is declared null and void (for undervalue transactions), or the gift vests in
the Official Assignee (for gifts) (section 102)
• should the individual subsequently become a bankrupt
Therefore, such transactions should always be done at actual value based on a valuation
report done by an established valuer (i.e. cannot pay a valuer to value the property at a
lower figure).
If transfer is by way of a gift, it would be difficult to find potential buyers within the first 5
years.

Potential Pitfalls:
Divorce
• Many married couples make use of decoupling as a way to avoid paying
ABSD
• Example:
• Husband and wife own one property
• Wife transfers her share to husband
• Wife purchases a new property, and does not have to pay ABSD (as the new property
would be her first property)
• Problems may arise in the case of divorce
• Wife will argue that both properties are matrimonial assets
• Husband will argue that he paid wife fully, and first property belongs to him fully
• Still possible, but important to advise clients on this potential issue

 

Vivien Mok
H/P: 90628592

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