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Decoupling to save on tax? You may lose right to property if ties go awry
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The High Court has found that property decoupling is not without pitfalls, and owners who decouple can run afoul of the tax law if they are not upfront with their arrangements.
PHOTO: THE BUSINESS TIMES
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- High Court case highlights risks of decoupling to avoid ABSD, especially with 99-to-1 ownership splits. It can attract penalties if not a genuine transfer.
- Iras will investigate decoupling based on facts, looking at good faith versus deliberate tax avoidance with schemes lacking commercial substance.
- Owners should consider implications, as claiming a stake after “sham” decoupling is difficult, potentially leading to loss of property rights.
AI generated
Just google the word “decoupling” and you will see multiple listings from realtors and lawyers alike promoting their services to help property buyers avoid paying additional buyer’s stamp duty (ABSD) with such a creative home ownership plan.
But those who have been peddling such services for years may want to hit the pause button for now so that they can study the recent High Court case which found that such transactions are not without pitfalls. Indeed, the court found that owners who decouple can run afoul of the tax law if they are not upfront with their arrangements.
