The Illusion of the Proxy Purchase
To avoid escalating Additional Buyer’s Stamp Duty (ABSD) on secondary properties, some buyers contemplate informal proxy arrangements-funding property purchases in the names of children, elderly relatives, or third parties without clear legal documentation. However, recent legal precedents and tax audits highlight severe hazards associated with this practice.
Critical Legal and Financial Risks
- Beneficial Ownership Disputes: Without an explicit, legally validated trust instrument, the registered legal owner possesses full rights to mortgage, occupy, or sell the property.
- Estate and Creditor Exposure: If the proxy owner faces bankruptcy, divorce proceedings, or untimely demise, the asset becomes vulnerable to creditor claims or probate disputes.
- Inland Revenue Authority of Singapore (IRAS) Anti-Avoidance Rules: Stringent tax audits identify sham arrangements, levying clawback ABSD with substantial penalty surcharges.
Structuring Transparent and Legitimate Property Holds
Investors seeking wealth transfer should utilize properly drafted revocable or irrevocable living trusts with licensed legal fiduciaries, ensuring absolute compliance with prevailing tax regulations.