By Trend News Line 2024-05-23 10:30:00.
**Property Buyers Under Investigation for Tax Avoidance**
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In a recent development, the government has intensified its probe into residential property deals for potential tax avoidance. Buyers who are now facing investigation claim they were advised by real estate agents to structure their purchases using the controversial “99-to-1” arrangement. This arrangement involves one party owning 99% of the property, while the other owns just 1%.
**Coached by Real Estate Agents**
Some buyers, now facing hefty Additional Buyer’s Stamp Duty (ABSD) payments and surcharges, allege they were coached by agents, bankers, and lawyers to opt for the 99-to-1 arrangement. One buyer, who chose to remain anonymous, shared her experience with The Business Times. She revealed that she and her partner were advised to go with this arrangement to secure financing for their home purchase. The buyer, who was earning a higher income than her partner at the time, purchased a condominium unit for under S$2 million.
**Questionable Advice from Agents**
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Another buyer recounted being encouraged by an agent to pursue the 99-to-1 structured deal to potentially avoid ABSD in the future. Despite not following the agent’s advice, he acknowledged that such arrangements were openly discussed by agents as a common practice in the industry.
**Crackdown on Tax Avoidance**
The Inland Revenue Authority of Singapore (Iras) has reviewed numerous cases involving 99-to-1 schemes, with a significant number found to involve tax avoidance. Iras has clawed back around S$60 million in ABSD and surcharges from these cases. Additionally, cases with evidence of property agent involvement are currently under review by the Council for Estate Agencies (CEA).
**Legality of 99-to-1 Arrangements**
Iras clarified that while not all 99-to-1 arrangements constitute tax avoidance, schemes aimed at reducing tax liability through artificial means are subject to scrutiny. Lawyers emphasised that legitimate reasons, such as estate planning or risk allocation, may justify holding property in a 99-to-1 arrangement. However, deliberate tax avoidance through such schemes could lead to severe penalties for all parties involved.
**Industry Response**
Real estate agencies like OrangeTee & Tie have taken proactive measures to discontinue discussions on the 99-to-1 arrangement. Property agents are advised to act responsibly and professionally, seeking guidance from legal and tax professionals to ensure compliance with regulations. Any breaches of the Code of Ethics and Professional Client Care could result in fines or license suspensions.
**Conclusion**
As the government cracks down on tax avoidance in property transactions, buyers and industry professionals must exercise caution and adhere to legal guidelines. Transparency and accountability are crucial in maintaining the integrity of the real estate market and preventing financial misconduct. Stay tuned for further updates on this ongoing investigation..
– home buyers facing ABSD probes blaming advice real estate agents
– buyers facing ABSD probes blaming advice real estate agents.
