By Trend News Line 2024-05-23 10:30:00.
In a recent development regarding property purchases in Singapore, individuals who used a so-called “99-to-1” arrangement to structure their deals are now facing scrutiny from the government for potential tax avoidance. Let’s delve deeper into this issue and explore the implications for buyers and real estate agents.
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### What is the “99-to-1” arrangement?
The “99-to-1” scheme involves a tenancy-in-common structure where ownership of a property is divided in a specific ratio between co-owners. In this arrangement, one party typically holds a 99% stake in the property, while the other holds a 1% stake. This structured deal is often used to reduce the amount of Additional Buyer’s Stamp Duty (ABSD) payable on the purchase of a second property.
### The Controversy Surrounding the Scheme
While some buyers claim they were advised by real estate agents to use the “99-to-1” arrangement to secure financing and avoid ABSD, the Inland Revenue Authority of Singapore (Iras) has raised concerns about the potential tax avoidance associated with such deals. Iras has reviewed multiple cases involving this arrangement and identified instances where tax avoidance was evident, leading to the recovery of millions in ABSD and surcharges.
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### Legal Implications and Professional Responsibility
Lawyers have weighed in on the issue, highlighting that the use of a “99-to-1” arrangement may not always constitute tax avoidance, especially in cases where it is used for legitimate purposes such as estate planning or risk allocation. However, if professionals knowingly advise buyers to use this scheme with the intention of avoiding tax payments, they may be held liable under professional rules for aiding in tax avoidance.
### Industry Response and Regulatory Measures
In response to the controversy, real estate agencies like OrangeTee & Tie have taken proactive steps to advise their agents against promoting the “99-to-1” arrangement. Industry leaders emphasize the importance of seeking advice from legal and tax professionals before committing to a property purchase, underscoring the need for transparency and compliance with regulations.
### CEA’s Stance on Professional Conduct
The Council for Estate Agencies (CEA) has reiterated its commitment to upholding ethical standards in the industry and warns that agents found breaching the Code of Ethics and Professional Client Care may face fines or license suspension. CEA emphasizes the importance of acting responsibly and professionally in facilitating property transactions to maintain trust and integrity in the real estate sector.
### Conclusion
As the government continues to investigate residential property deals for potential tax avoidance, buyers and real estate agents are urged to exercise caution and seek proper guidance to ensure compliance with regulations. The controversy surrounding the “99-to-1” arrangement serves as a reminder of the importance of ethical conduct and transparency in the real estate industry to uphold trust and accountability in property transactions..
– home buyers facing ABSD probes
– real estate agents advice home buyers.
