What is Decoupling (Fractional Purchase)
Decoupling happens when one partner’s share in a property is transferred to the other person.
Why Consider Decoupling
This creates a sole owner, leaving the other half of the pair free to buy another home without having to pay the ABSD (Additional Buyer Stamp Duty), as that purchase will be seen as his or her first.
Eligibility – Who can undergo Decoupling
Currently only allowed for private and commercial properties.
HDB will only allow decoupling for the following conditions:
– only on grounds of deceased, divorce or change in financial situation (loss of income for at least 12 continuous months or bankruptcy).
Go to the bank and declare intention to decouple. The value of fractional purchase based on the fair market value of the property.
Points to Consider
(i) Transferring of ownership through a sale and purchase
Transferring a half share to one of the co-owners is still subject to the standard stamp duty rate of 3 per cent, as it is considered a transaction.
ABSD is also payable on the value of the share transferred if the party that is taking over the half share has more than one property.
(ii) Stamp Duty
Stamp duty has to be paid within 14 days of the execution of the sale and purchase agreement.
Seller’s stamp duty will be payable if the property was bought less than four years ago. Amount is payable for the part that is sold.
(iii) Restructuring and refinancing of bank loan
If there is an outstanding home loan, then this must be discharged and a new mortgage loan is obtained from the bank.
Note: Check whether you incur any penalty for redeeming the loan and the cost of getting a fresh mortgage
(iv) Refund of CPF monies
If the Central Provident Fund (CPF) Board is involved, you must consider the refund of CPF money to be made to the party getting out of the ownership of the property together with the accrued interest upon completion of the sale.
The transfer from one spouse to another can be via a gift or a sale. If it is a sale, then an actual cash transfer must take place. If it is a gift, the property may not be marketable for a few years. The stamp duty fee is the same, whether it is a gift or a sale
(v) Legal and Valuation Fees
Legal fees will be $5,600 to $6,500 at least.
Credit: Straits Times, Property Sales, Cnplaw