Mortgage Loan

Decoupling to Build Wealth: A Strategic Approach in Singapore

March 12, 2025

Property ownership is a powerful wealth-building strategy in Singapore, and one common method that savvy investors use to maximize their holdings is decoupling. Decoupling allows couples to restructure private property ownership strategically, enabling one spouse to purchase another residential private property without incurring the hefty Additional Buyer’s Stamp Duty (ABSD). In this article, we explore the concept of decoupling and its benefits, risks, and considerations for wealth-building to meet our retirement goals.

What is Decoupling?

Decoupling refers to the process where one co-owner of a property transfers their share to the other co-owner by way of sale, effectively removing their name from ownership. This allows the outgoing owner to purchase another property as a first-time buyer, avoiding ABSD, which currently stands at 20% for Singapore citizens purchasing a second property.

Benefits of Decoupling

1. Avoiding ABSD and Expanding Property Portfolio

Without decoupling, a couple looking to buy a second property would be subject to ABSD of 20% (Singapore Citizen rate as of 2025).
By relinquishing ownership of the first property entirely to one spouse by way of sale, the other can purchase a second home as a first-time buyer, avoiding ABSD and maximizing investment potential.

2. Leveraging Property Appreciation for Wealth Growth

Singapore’s real estate market has historically seen steady capital appreciation. Owning multiple properties allows investors to benefit from long-term price growth.
Rental income from investment properties can provide passive income, servicing of loans and support wealth accumulation.

3. Enhancing Loan Eligibility and CPF Utilization

The spouse taking over full ownership can refinance the mortgage to optimize loan tenure and interest rates.
The outgoing spouse regains the ability to use their CPF Ordinary Account (OA) savings for their next property purchase.

How to Decouple: Step-by-Step Process

Property Valuation – Request for indicative valuation through IQrate to determine the market value of the property.
Legal Process & Stamp Duties – The outgoing owner sells their share to the remaining owner, triggering Buyer’s Stamp Duty (BSD) on the transferred portion.
Financing & Refinancing – The remaining owner must qualify for a new loan to take over the property’s mortgage (if applicable).
CPF Refund & Cash Considerations – CPF funds used by the outgoing owner must be refunded with accrued interest before they can be used again.
Completion of Transfer – Once legal and financial matters are settled, the new ownership structure is updated.

Risks and Considerations

1. Legal and Financial Costs

Legal fees and stamp duties apply, and BSD must be paid on the share being transferred.
Refinancing may involve penalties if an existing mortgage has a lock-in period or clawback of subsidies.

2. Mortgage Qualification

The spouse taking full ownership must be able to finance the mortgage independently through means of passing Total Debt Servicing Ratio (TDSR) or Concession of Total Debt Servicing Ratio (Limited Banks).

3. CPF Implications

The seller’s CPF used for the first property must be refunded before being utilized for a second purchase.

4. Regulatory Changes

The government may introduce policies that affect decoupling strategies, so staying updated with regulations is essential.

Conclusion

Decoupling is a strategic move for homeowners seeking to grow their wealth through property investments. By carefully navigating legal, financial, and tax implications, couples can optimize their property holdings and maximize returns. However, due diligence and professional consultation with IQrate mortgage advisors and legal experts are crucial to ensuring a smooth and beneficial transition.