In Singapore, property ownership can change in two main ways. These are through a Sale & Purchase Agreement (S&P) or Deed of Gift. Both achieve transfer of title, but they differ in purpose, process, and financial implications.
The method used for ownership transfer affects the financial results. This will impact Central Provident Fund (CPF) refunds and loan repayment needs.
Sale & Purchase (S&P) Agreement
The S&P method is treated as a standard commercial transaction, where the buyer (retaining party) purchases the seller’s share at market value.
CPF Refund Implication: A key advantage of S&P is that only the selling party is required to refund the CPF monies they used for the property, along with the accrued interest, back into their OA. This refund is usually covered by the sale proceeds received from the buyer, minimizing immediate cash expenditure for the buyer in relation to the seller’s CPF.
Loan Implication: The mortgage loan itself is not fully discharged; instead, the retaining buyer refinances the outstanding loan under their sole name. Only their financial capacity is reassessed by the bank.
Key Features:
- Involves payment, typically the market value or an agreed price.
- Legal contract prepared by both parties’ conveyancing lawyers.
- Buyer pays option fee, exercise fee, and eventually stamp duties (Buyer’s Stamp Duty, possibly ABSD).
- The buyer may use bank financing if they take a home loan.
- After completion, ownership transfers to the buyer, and a new title deed is registered.
Common Use:
- Purchase of new or resale property.
- Sale between family members or third parties.
- Refinancing often follows the S&P process when someone takes a new loan.
Deed of Gift (Transfer without Consideration)
Under a Deed of Gift, ownership is transferred voluntarily without monetary consideration.
CPF Refund Implication: Although no cash is exchanged, CPF regulations require the donor to refund the full amount of CPF used for the property (principal plus accrued interest) into OA account. Since there are no sale proceeds, this often necessitates a substantial cash outlay to meet the refund requirement.
Loan Implication: If there is an outstanding loan secured against the property, it generally needs to be completely settled and discharged before the transfer by gift can be executed, adding major upfront cash requirements, as financial institutions do not provide financing on gift property.
The requirement to refund all accrued interest when executing a Deed of Gift significantly increases the immediate cash expenditure compared to the S&P method, where only the seller’s CPF must be refunded, usually covered by the sale proceeds. Therefore, the S&P agreement is typically the more financially prudent route unless the property was bought entirely with cash and no CPF funds were utilized.
Key Features:
- Voluntary transfer from donor to donee, usually among family members.
- You must execute it voluntarily and without coercion.
- Still requires stamp duty, calculated on the market value of the property (even though no money changes hands).
- You cannot revoke it once you register, unless you prove that you executed it under duress or fraud.
- The donor must make the CPF refund to their CPF account before gifting if they used CPF funds for the property.
- You cannot use bank loans to finance a gifted property, you must keep it mortgage-free.
Common Use:
- Parents gifting property to children.
- Transfer of ownership for estate or legacy planning.
- When no one intends a sale or monetary transaction.
Key Differences at a Glance
| Aspect | Sale & Purchase Agreement | Deed of Gift |
| Consideration | Monetary (buyer pays seller) | None (pure gift) |
| Stamp Duty | Based on purchase price or market value | Based on market value |
| Financing | Bank loan allowed | Must be mortgage-free |
| CPF Usage | Allowed for purchase | Not allowed for the recipient; the donor must refund the CPF used |
| Purpose | Investment or ownership transfer with payment | Family transfer or estate planning |
| Revocability | Contractual obligations apply | Generally irrevocable once registered |
Example
Sale & Purchase (S&P) Agreement
Mr. A and Mrs. B signed a Sale and Purchase Agreement (S&P) for Mr. A to buy over Mrs. B share of the property.
Ownership Type: Joint Tenancy
- Market value = $1.2M
- Existing housing loan outstanding at $200,000
- CPF used = $300,000 + $60,000 (accrued interest) = $360,000
Mr A to acquire Mrs B share at $600,000 and to refinance half share of $200,000 outstanding loan owing to FI.
Mrs B is to receive $600,000 from Mr A arising from this sale. She must pay her 50% share of the home loan, which amounts to $100,000. She will also refund her CPF P + I, which is $360,000. In the end, she will have positive net proceeds of $140,000 in cash.
Stamp duty for the sale & purchase will apply based on the market value ($600,000) and legal expenses.
Deed of Gift
Mr. Tan bought a condo for $1M using $300,000 CPF and $700,000 cash. He now wants to gift it to his daughter under a Deed of Gift.
- Market value = $1.2M
- CPF used = $300,000 + $60,000 (accrued interest) = $360,000
Before transfer, Mr. Tan must refund $360,000 into his CPF OA. His daughter (donee) does not need to refund anything, as she’s not paying.
Stamp duty for the transfer will still apply based on market value ($1.2M).
The Conveyancing Process Timeline
The decoupling process is complex. It includes legal transfer, CPF refund processing, and loan restructuring. This process takes a lot of time. It usually takes about 10 to 12 weeks to finish.
The complexity of requiring two separate law firms to coordinate documentation, loan redemption notices, stamp duty filings, and CPF clearance introduces potential bottlenecks. You must obtain CPF clearance before you can register the final transfer. Any delays will affect the outgoing party’s ability to buy their next property on time.
Conclusion
Both the Sale & Purchase (S&P) Agreement and Deed of Gift are valid legal tools to transfer property ownership in Singapore.
The S&P is a transaction that allows bank financing. The Deed of Gift is a sentimental transfer. Non-commercial and great for family legacy planning.
Always engage a qualified conveyancing lawyer to ensure compliance with Singapore Land Authority (SLA) and Inland Revenue Authority of Singapore (IRAS) requirements.
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