{"id":22332,"date":"2019-01-23T11:50:38","date_gmt":"2019-01-23T03:50:38","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=22332"},"modified":"2024-10-18T17:15:32","modified_gmt":"2024-10-18T09:15:32","slug":"buying-property-under-your-childs-name-is-it-a-good-idea","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/buying-property-under-your-childs-name-is-it-a-good-idea\/","title":{"rendered":"Buying property under your child’s name: Is it a good idea?"},"content":{"rendered":"
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Singaporeans are experts at finding ways around the Additional Buyers Stamp Duty (ABSD)<\/a>. And one increasingly popular method is to buy under the name of a child. But before you decide to do this, make sure you’re aware of the risks involved. – it may not be as clear cut as it seems:<\/p>\n

\"Child
Bonus: In future, you can always bring up how grateful your child should be, and auto-win arguments<\/figcaption><\/figure>\n

Why buy a property under your child’s name?<\/h2>\n

The first reason is to avoid the ABSD. Under the new cooling measures, Singaporeans must pay 20% ABSD on their second property – Permanent Residents must pay 30%. This is a huge amount when you consider the price of a house.<\/p>\n

Even if you’re getting a mid-ranged condo like Optima (very affordable at just $1.06 million<\/a>), 20% ABSD would mean a huge tax of S$180,200.<\/p>\n

One way around this is simply to buy through your child. Assuming your child doesn’t have a house of their own, they wouldn’t be subject to ABSD.<\/p>\n

If your child is too young (below 21), some sellers might advise you to buy the property through a trust, which lists your child as the beneficiary. This means your child can call for the property to be transferred to them once they turn 21. In the meantime, however, you can still buy the property while dodging the ABSD.<\/p>\n

The second reason is to get better financing. If you have an outstanding home loan, for example, or if the loan tenure would you take you past the retirement age of 65, you will get a much lower Loan to Value (LTV) ratio<\/a>. You might need to fork out as much as 40% of the property price as a down payment.<\/p>\n

If you buy through your child (assuming your child is 30 years old or younger), your child could get a 30 year loan tenure and the full 75% LTV.<\/p>\n

These methods are completely legal, by the way – and government authorities are aware of what’s going on (even if they have not tried to close the loopholes).<\/p>\n

\"Handing
If you use a trust, be ready to hand over more than just the keys.<\/figcaption><\/figure>\n

But is this actually a good idea?<\/h2>\n

If it’s your intent to transfer the property to your child anyway, then the answer is always yes. If you’re dead set on giving your kids a condo at 21, you may as well buy it under their name now, and avoid paying ABSD unnecessarily.<\/p>\n

However, things get problematic if you’re sneakily buying for investment. Some factors you need to consider are:<\/p>\n