Investing in a Second Home in Singapore: ABSD and Financing
Thinking about buying a second property in Singapore? You’re not alone. Whether it’s for rental income, long-term capital appreciation, or simply diversifying your portfolio, property investment remains a popular strategy among Singaporeans. After all, about 45% of HDB flat owners who own at least one private residential property rent them out for side income.
Before investing in your second property, there’s one major factor you’ll need to account for: the Additional Buyer’s Stamp Duty (ABSD).
ABSD is an additional tax imposed on top of the standard Buyer’s Stamp Duty (BSD) when you purchase a second or subsequent residential property in Singapore. The rate depends on your residency status and the number of homes you already own.
Here’s a quick overview of the current ABSD rates for second and subsequent properties:
Buyer Type | Second Property ABSD Rate |
Singapore Citizens | 20% |
Permanent Residents | 30% |
Foreigners | 60% |
As you can see from the table above, ABSD can have significant financial implications. A Singapore Citizen buying a second residential property valued at S$1.5 million will incur an ABSD of S$300,000, and that’s on top of your BSD and other purchase-related costs. It’s a hefty sum, which is why understanding ABSD is critical before committing to any second-home investment.
Although ABSD doesn’t apply to Singapore citizens purchasing their first home, do note that Permanent Residents and foreigners purchasing their first homes in Singapore are subject to ABSD rates of 5% and 60% respectively.
Seller’s Stamp Duty and Holding Periods
In addition to second property taxes, here’s another factor you should keep in mind if you intend on investing in private property: Seller’s Stamp Duty and holding periods. Effective as of 4 July 2025, private property owners will be subject to higher Seller’s Stamp Duty (SSD) rates and longer holding periods.
Holding period | Rates before 4 July 2025 | Rates as of 4 July 2025 |
Up to 1 year | 12% | 16% |
>1 year–2 years | 8% | 12% |
>2 years–3 years | 4% | 8% |
>3 years–4 years | 0% | 4% |
>4 years | 0% | 0% |
These new rates apply to all private property purchases made after midnight on the 4th of July. Housing and Development Board (HDB) flats will not be affected, due to existing Minimum Occupation Period rules for HDB properties.
Financing Your Second Home: Loan Considerations
Securing financing for a second property comes with additional hurdles. Loan-to-Value (LTV) limits are tighter, and your ability to borrow depends heavily on your existing mortgage commitments.
Here’s what you need to know:
- For your first property loan, the LTV limit may be as high as 75% (or 55% if the loan tenure exceeds 30 years or extends past age 65).
- For your second property loan, the LTV limit drops to 45%, or 25%.
- For your third or subsequent housing loans, the rate decreases further to 35% or 25%.
Be cautious when it comes to lengthy loan tenures. If they stretch beyond 30 years (or 25 years for HDB flats), or extend beyond the borrower’s age of 65 years, your LTV gets lowered.
In addition to the LTV, the Total Debt Servicing Ratio (TDSR) will apply. Implemented by the Monetary Authority of Singapore (MAS) to promote responsible borrowing and lending practices, the TSDR directly impacts your loan affordability. It limits your total monthly debt obligations—including your current mortgage, car loans, and credit card debt—to 55% of your gross monthly income.
If you’re already servicing a private home loan, your borrowing capacity for a second property may be significantly reduced. This makes it crucial to reassess your financial standing before taking the plunge.
Strategies for Managing ABSD Costs
While ABSD is unavoidable in many cases, there are strategies you can use to manage or reduce its impact. For instance:
- Decoupling: This involves restructuring ownership of a home shared by spouses to allow one party to purchase a second property as a first-time buyer. (Decoupling property is a complex process and warrants professional advice.)
- Alternative Ownership Structures: Depending on your financial goals and profile, it may be worth exploring if purchasing property under a different entity or trust is viable—if legally permissible and aligned with current regulations.
These strategies come with risks, costs, and legal implications, so always consult a qualified property or legalfinancial advisor before proceeding. Be mindful that strategies that appear viable now may not remain viable in the long term.
Consider the following actions the government has taken to close perceived ABSD loopholes in the past:
- Assigning an ABSD rate of 35% to property owners who have transferred shares to “living trusts” in 2022.
- Mandating upfront payment amounting to a 65% ABSD rate for individuals who have purchased a property on trust for their child in 2023.
Remember that while decoupling property is entirely legal, not fulfilling one’s tax obligations is not. You don’t want to land yourself in a position where you’ll have to conduct house loan refinancing under unfavourable terms. Or worse, not being able to meet repayments for short-term bridging loans in Singapore.
Navigate the Path to 2nd Property Ownership with a Mortgage Broker
Buying a second property in Singapore isn’t as straightforward as buying your first. With ABSD rates raising upfront costs and loan restrictions tightening, property downpayments in Singapore are more expensive than ever. Careful planning is advisable if you wish to remain in good financial standing.
Before making any commitments, take your time to understand how these policies affect your affordability and long-term goals. You can also use our maximum loan calculator for quick insights into what your property aspirations may cost you. And if in doubt, speak to The Loan Connection and let us guide you through the process.
