Does ABSD Apply to Inherited Property in Singapore?

However, when you are ready, you might be asking, "Do I need to pay ABSD on the flat my mother left me?"

It is one of the first questions heirs ask, usually while the rest of the estate paperwork is still in motion.

The worry makes sense, because the Additional Buyer's Stamp Duty (ABSD) can be the highest single cost in a Singapore property purchase, at 20% of the price or more. The answer is better than most people expect.

To cut a long story short, no, ABSD is not payable when you inherit a residential property through a will, the Intestate Succession Act, or the Muslim Law of Inheritance.

The cost, if there is one, comes one step later, because the inherited home counts as a property you own the moment you buy anything else.

In this blog post, we'll cover the tax side of that decision, whether you keep the home or sell the property.

Why inheriting does not trigger ABSD

The Inland Revenue Authority of Singapore (IRAS) does not treat an inheritance as a property purchase. When a home passes to you through a will, the Intestate Succession Act or Muslim inheritance law, it is treated as a transfer to a beneficiary, not a sale.

That means you do not pay Buyer's Stamp Duty (BSD) or ABSD on the inherited property itself. Even if you already own one or two homes, inheriting another does not trigger ABSD.

So, if you already own two condos and inherit a third, there is no ABSD bill just for receiving it.

There is also no inheritance tax to worry about. Estate duty was abolished for deaths on or after 15 February 2008, so the inheritance itself does not come with estate duty or stamp duty.

The inherited home counts toward your next purchase

ABSD comes back into the picture when you buy your next property. When IRAS works out your ABSD rate, it counts every residential property you own, no matter how you got it.

You could have bought it, received it as a gift, inherited it from your parents, or even hold it through a trust.

So, that inherited home counts too. If it is the only property you own, buying another home means you are now buying your second property, so the higher second-property ABSD rate may apply.

And here is the part that catches people out: even a small share can count as a whole property. IRAS gives an example where inheriting just a 10% share is enough to move someone from second-property to third-property ABSD rates on their next purchase.

Here are the ABSD rates in force since 27 April 2023.

The duty is calculated on the higher of the purchase price or the market value. For example, a $1.5 million condo bought as a second property by a Singapore Citizen attracts the 20% rate, which comes up to a duty of $300,000.

Buying out your co-heirs is a purchase

You can also buy the shares from your other co-heirs, but under the stamp-duty rules, the buyout is considered an acquisition. Many families choose to settle an estate exactly this way.

This means Buyer's Stamp Duty applies to the share you take over. ABSD can apply on top of it, based on how many properties you own at that point.

Before you agree to a buyout, price the duty into it, because a family arrangement signed without checking the stamp duty can end up costlier than selling the whole property on the open market.

Selling first can reset the count

IRAS assesses your property count on the day you commit to the new purchase, which means a genuine, legally binding sale of the inherited home, contracted before you exercise the Option to Purchase on the next one, can take it out of your count entirely. The order of the two deals decides the bill.

Sell first with a binding contract, then buy, because the reverse order can leave you paying second-property Additional Buyer's Stamp Duty on the new home.

The sale must also be real. The Commissioner of Stamp Duties can set aside arrangements designed only to escape the duty.

Our complete guide to selling an inherited property in Singapore walks through probate, the title transfer, and the sale itself. For flats, our guide How Long to Sell an Inherited HDB Flat covers the HDB deadlines that decide how much time you have to sequence the two deals.

What heirs ask about the tax

Do I pay any stamp duty when the property is transferred to me?

You do not pay stamp duty when a property is transferred to you under a will, the Intestate Succession Act or Muslim inheritance law. Estate duty was also abolished for deaths on or after 15 February 2008, so there is no inheritance tax to worry about either.

I own an HDB flat and inherited a private condo. Do I pay ABSD on the condo?

No. ABSD is not payable on the inheritance itself, regardless of what you already own.

However, you now own two residential properties, so a further purchase can attract third-property ABSD rates.

My inherited share is only a quarter of the property. Does it still count?

Yes. Any share of a residential property, however small, adds one full property to your count when IRAS sets the ABSD rate on your next purchase.

Will I pay tax when I sell the inherited property?

Singapore does not have capital gains tax, so you do not pay tax just because you sold the inherited property for a profit. But Seller's Stamp Duty (SSD) could still come into play if the person who passed away bought the property only a few years before it was sold.

The SSD holding period starts from the date they bought it.

If they had owned the property for more than four years, there is no SSD to pay. If it was less than four years, check the SSD rates before you decide when to sell, as the timing could make a real difference to your final proceeds.

Weighing up whether to keep the home or sell it? The Prop.sg team can run the numbers for your exact property count before you commit either way.