Decoupling is a part purchase where there are multiple owners to a property and one of the owners buy over the share of the other owner(s)

Decoupling is where there is a husband-wife relationship between the two owners of the property, hence “de-couple-ing”

Decoupling is essentially a specific form of part purchase

Things to note: STAMP DUTY in Decoupling

Stamp duty : Payable in a part purchase (decoupling). The stamp duty (including Buyer’s Stamp duty, Additional Buyer Stamp Duty (ABSD) and Seller’s stamp duty) is determined by 1) Valuation price 2) Share in the property transferred

Stamp duty is also payable even for transfers by way of gift

PROCEDURES : Encumbrances

CPF Monies

  • If CPF monies were used in the purchase, it needs to be refunded to the CPF account of the seller/transferor

Existing mortgage

  • As banks usually require notice of 3 months for redemption, interest in lieu of notice usually needs to be paid
  • To decide completion date carefully as there may be pre-payment penalties involved

What is needed?

Drafting of Sale and Purchase Agreement (S&P), requires:

  1. NRICs/Passports of all parties
  2. Address of the property
  3. Valuation report

Completion:

  • If bank loan and/or CPF funds are required to buy over the share: 8 to 12 weeks
  • If no bank loan and no CPF funds are required to buy over the share : 2 weeks (the purchaser must have the funds to pay for 95% of the share)

Other things to take note

Deposits : Usually 5% of the purchase price & May be paid directly to the seller without going through the lawyers

When can Seller purchase another property (for purposes of avoiding ABSD)?

  • Date of the S&P is the date that the seller is deemed to have sold the property. Thus, upon signing the S&P, he can go ahead and purchase another property
  • However, if the seller is using CPF funds to finance the new purchase, then completion of the part purchase must take place at least 3 weeks before the payment of the CPF for new purchase (eg either for 15% in BUC or completion

POTENTIAL PITFALLS

  1. Bankruptcy
  2. Divorce of married couple

Decoupling has become popular in recent years due to the implementation of ABSD, however please bear in mind that there will always be pros and cons.