New Reporter
03-07-23, 11:56
‘Decoupling’ to avoid ABSD: Couples who hold properties separately can face problems during divorce
If the properties are under one spouse’s name, the other partner will have a hard time proving that he or she also has a share in them.
Jul 2, 2023
Couples who buy properties and then hold them separately usually just look at the key benefit – saving on additional buyer’s stamp duty (ABSD).
But there are big risks with such a strategy, especially if a marriage breaks down and the spouses have to split their assets.
The process of holding properties separately – known as decoupling – usually involves one spouse ceasing joint ownership of the matrimonial home so that the other spouse becomes the sole owner.
It is popular among Singapore couples because it allows the other spouse to buy another property without having to pay ABSD as a “first-time” buyer.
If the property is under one spouse’s name, the other partner will have a hard time proving that he or she also has a share in it. Such a risk was highlighted in a recent dispute.
Things are simpler when a couple hold their home jointly: Their bank accounts and Central Provident Fund (CPF) records would usually show who has been paying the mortgage, which in turn will determine their stakes.
Records are less transparent when it comes to a property held by one person because only listed owners can use their CPF money or their own bank loans to repay the mortgage. While the other spouse could be contributing cash towards the purchase, he or she would need solid paperwork to prove this.
Who paid for the condominium unit
In a recent case, the $2 million home is held in the husband’s name, while the couple’s investment property, a $1 million condominium unit, is in the wife’s name.
The husband claimed that he paid more than 80 per cent on the purchase of the wife’s property, but the Family Court found that his cash contribution totalled only about 40 per cent.
Both sides could not produce conclusive bank records to show their actual contributions because the payments were made more than a decade ago.
The husband argued that the calculation was wrong because the court “wrongly attributed” many of his cash payments to the wife.
For instance, he said he paid the $70,000 or so in booking and legal fees by transferring the sum to her account. Similarly, he said he also transferred $400,000 to her account to pay the developer.
The wife produced records showing that her cheques were used to make these payments, but the husband could not produce conclusive banking records to support his case.
Hard to retrieve old records
Similarly, the husband also had problems proving that he paid for the bulk of the $2 million home.
For the home’s monthly mortgage, the man said he paid a total of $390,000, but the wife claimed he paid only about 40 per cent of this sum.
The husband also argued that he shelled out around $400,000 to pay off the remaining bank loan for the home and produced the bank’s final redemption notice to support this.
But High Court Judge Choo Han Teck noted that the letter from the bank, which was addressed to the couple, stated only that the mortgage was redeemed.
“It does not say that he paid the mortgage entirely by himself.
“It is not disputed that he liaised with the lawyers and the bank regarding the mortgage repayment, but this does not mean that all the monies for redemption came only from him,” said the judge.
He added that the letter did not state the total repayment amount, let alone prove that he had paid that sum.
Justice Choo found no reason to alter an earlier Family Court ruling that the couple should share all their matrimonial assets equally based on both their cash and non-monetary contributions.
While this case is not just about the parties’ rights to real estate based on their holdings, the lesson for couples with similar arrangements is that they have to prove their contributions if they want to stake claims on each other’s properties.
https://www.straitstimes.com/business/invest/couples-who-own-properties-separately-can-face-problems-during-divorce
If the properties are under one spouse’s name, the other partner will have a hard time proving that he or she also has a share in them.
Jul 2, 2023
Couples who buy properties and then hold them separately usually just look at the key benefit – saving on additional buyer’s stamp duty (ABSD).
But there are big risks with such a strategy, especially if a marriage breaks down and the spouses have to split their assets.
The process of holding properties separately – known as decoupling – usually involves one spouse ceasing joint ownership of the matrimonial home so that the other spouse becomes the sole owner.
It is popular among Singapore couples because it allows the other spouse to buy another property without having to pay ABSD as a “first-time” buyer.
If the property is under one spouse’s name, the other partner will have a hard time proving that he or she also has a share in it. Such a risk was highlighted in a recent dispute.
Things are simpler when a couple hold their home jointly: Their bank accounts and Central Provident Fund (CPF) records would usually show who has been paying the mortgage, which in turn will determine their stakes.
Records are less transparent when it comes to a property held by one person because only listed owners can use their CPF money or their own bank loans to repay the mortgage. While the other spouse could be contributing cash towards the purchase, he or she would need solid paperwork to prove this.
Who paid for the condominium unit
In a recent case, the $2 million home is held in the husband’s name, while the couple’s investment property, a $1 million condominium unit, is in the wife’s name.
The husband claimed that he paid more than 80 per cent on the purchase of the wife’s property, but the Family Court found that his cash contribution totalled only about 40 per cent.
Both sides could not produce conclusive bank records to show their actual contributions because the payments were made more than a decade ago.
The husband argued that the calculation was wrong because the court “wrongly attributed” many of his cash payments to the wife.
For instance, he said he paid the $70,000 or so in booking and legal fees by transferring the sum to her account. Similarly, he said he also transferred $400,000 to her account to pay the developer.
The wife produced records showing that her cheques were used to make these payments, but the husband could not produce conclusive banking records to support his case.
Hard to retrieve old records
Similarly, the husband also had problems proving that he paid for the bulk of the $2 million home.
For the home’s monthly mortgage, the man said he paid a total of $390,000, but the wife claimed he paid only about 40 per cent of this sum.
The husband also argued that he shelled out around $400,000 to pay off the remaining bank loan for the home and produced the bank’s final redemption notice to support this.
But High Court Judge Choo Han Teck noted that the letter from the bank, which was addressed to the couple, stated only that the mortgage was redeemed.
“It does not say that he paid the mortgage entirely by himself.
“It is not disputed that he liaised with the lawyers and the bank regarding the mortgage repayment, but this does not mean that all the monies for redemption came only from him,” said the judge.
He added that the letter did not state the total repayment amount, let alone prove that he had paid that sum.
Justice Choo found no reason to alter an earlier Family Court ruling that the couple should share all their matrimonial assets equally based on both their cash and non-monetary contributions.
While this case is not just about the parties’ rights to real estate based on their holdings, the lesson for couples with similar arrangements is that they have to prove their contributions if they want to stake claims on each other’s properties.
https://www.straitstimes.com/business/invest/couples-who-own-properties-separately-can-face-problems-during-divorce