Sell One Buy Two, Decoupling & 99-to-1 What’s it all about?

How to Sell One Buy Two?

"Sell One Buy Two" is a real estate strategy in Singapore where a couple sells their jointly-owned property and uses the proceeds to buy two separate properties, with each spouse owning one. The main goal is to avoid the Additional Buyer's Stamp Duty (ABSD) (20% ABSD for Singaporeans—$200k on a $1M property—and 30% for PRs, which is $300k)

How It Works

• Step 1: Selling the First Property. The couple sells their jointly-owned property (e.g., an HDB flat or condo). The proceeds from this sale are used as the down payment for the two new properties.
  

• Step 2: Buying Two New Properties. The couple then buys two private properties, with each spouse purchasing one under their own name. Since neither person technically owns a residential property at the time of purchase, they are considered first-time buyers and are not liable for ABSD. This allows them to secure a loan-to-value (LTV) ratio of up to 75% for each property, which is much higher than the LTV for a second property.
  

Risks and Considerations

While this plan sounds good, it's risky and not for everyone.

• High Costs: You'll need a lot of money upfront for down payments, taxes, and lawyer fees for two homes. You'll also have to pay two home loans every month. This can be very stressful, especially if one person's income drops.

• Market Dangers: Your second property might not make you money. If you can't find good tenants or if property values fall, you could end up losing money.

• Expensive Loans: With today's high interest rates, paying for two mortgages each month will be very costly.
  

What is Decoupling?

Decoupling is the legal process of removing one co-owner from a property, allowing that person to be considered a "first-time buyer" again.

Example:

If a couple owns a condo jointly and the husband is removed as a co-owner via a part-sale or transfer of ownership, he can then buy a second property in his name without paying ABSD (assuming he doesn’t own any other properties).

There are two main decoupling methods:

1. Part-purchase (for private property): One spouse buys over the other's share, usually with CPF and/or a new loan.

2. Transfer via gift (less common): Done only if no CPF was used or if CPF funds can be refunded properly.

Note: Decoupling cannot be done for HDB flats (due to eligibility restrictions and HDB rules), unless it's due to specific legal grounds such as divorce or death.

Is 99-to-1 Ownership Legal in Singapore?

The 99-to-1 ownership scheme involves structuring ownership so that one party owns 99% of a property, and the other owns 1%. This is often done with the intention of decoupling later more easily or to reduce future ABSD.

Is it legal?

The 99-to-1 structure is not illegal, and the Inland Revenue Authority of Singapore (IRAS) allows such arrangements—if done with real intent and proper documentation.

However, recent scrutiny has increased. In 2023, IRAS announced it would audit 99-to-1 and similar structures to clamp down on ABSD evasion. If such arrangements are found to be artificial or tax avoidance schemes, heavy penalties may apply including:

• Payment of the full ABSD amount, plus interest.

• A 50% surcharge on the unpaid tax.

• Criminal prosecution for tax evasion in serious cases.
  

Risks of 99-to-1:

• Stamp duties apply on the full market value when ownership is transferred later.

• Loan eligibility can be affected by the unequal share.

• Legal and ethical concerns if the structure is deemed abusive.

The key issue is whether a "sham" arrangement exists, where the 1% owner sells their share but retains a "beneficial interest" in the property through a secret agreement. In such cases, the individual is deemed to have made a false declaration of ownership, which is an illegal act of tax evasion.

In short, while the legal framework allows for unequal ownership shares and property transfers, the government is cracking down on arrangements that lack commercial substance and are primarily designed to skirt tax laws. Property owners considering such strategies should always seek legal and financial advice to ensure their actions are in line with the law and not considered tax evasion.

Final Thoughts

The “Sell One Buy Two” approach, decoupling, and 99-to-1 structuring are powerful tools when used responsibly. But they come with complex financial, legal, and tax implications. Not every case is suitable, and ABSD savings should never be the only consideration.

As a property agent, I’ve seen this strategy work very well for couples who plan ahead, get the right legal advice, and execute each step carefully. But as with all property decisions, personal circumstances and financial readiness are key.

If you're thinking of making a move, I’d be happy to guide you through the options tailored to your unique situation.