{"id":25959,"date":"2022-10-14T11:50:00","date_gmt":"2022-10-14T03:50:00","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=25959"},"modified":"2022-10-17T19:47:33","modified_gmt":"2022-10-17T11:47:33","slug":"property-jargon-of-the-day-decoupling","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/property-jargon-of-the-day-decoupling\/","title":{"rendered":"Property Jargon of the Day: Decoupling"},"content":{"rendered":"
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Every day, 99.co takes a piece of property jargon and demystifies it. Today, we’ll look into a word that you keep hearing at property seminars or from agents: Decoupling<\/strong>.<\/p>\n\n\n\n

What is decoupling?<\/h2>\n\n\n\n

Decoupling is when one of two co-owners of a house transfers all their shares to the other, thus surrendering ownership completely. This involves one spouse giving up their co-owner status, and becoming an \u201cauthorised occupier\u201d.<\/p>\n\n\n\n

This can happen for a number of reasons, such as divorce. But there’s another sneaky use for it: avoiding the ABSD<\/a>. Remember, when buying your second property, you’re subject to a tax of 12% (or even higher if you’re not a Singapore citizen). This is the main deterrent to an investment property.<\/p>\n\n\n

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By decoupling, you could get the usual maximum LTV of 75% when buying your next property.<\/figcaption><\/figure><\/div>\n\n\n

Here\u2019s how it works: you transfer your share in a property to your partner, leaving them as the sole owner. Since you now don\u2019t own any property, you\u2019re free to buy your second home without<\/strong> having to pay ABSD. On paper, this looks like a win-win situation, and many couples\u00a0have\u00a0<\/em>jumped on the bandwagon and opted to decouple.<\/p>\n\n\n\n

But when it comes to decoupling, there\u2019s more to it than meets the eye. More specifically, here are some things to take into consideration.<\/p>\n\n\n\n

It’s not just about ABSD, it also impacts your maximum loan and CPF usage<\/h3>\n\n\n\n

When you have an outstanding home loan, your maximum LTV <\/a>for a bank loan is 45% of the property price or value (whichever is lower). By decoupling, you could get the usual maximum LTV of 75% when buying your next property.<\/p>\n\n\n\n

Then there’s the issue of the CPF. If you already own a house, you need to have enough in your CPF to meet the basic retirement sum, before you can use any excess monies to for another property. You can check your Basic Retirement Sum<\/a> (BRS) on the CPF website. As most buyers use their CPF for the down payment\u00a0and the monthly home loans, they’ll want to decouple so they can access as much of heir CPF Ordinary Account (CPF OA) as possible.<\/p>\n\n\n\n

But it’s not as simple as “just transferring” your share<\/h3>\n\n\n\n

Important conditions to watch for include:<\/p>\n\n\n\n