The mechanism works because ABSD is assessed per buyer, not per household. If a property is transferred entirely into one spouse's name, the other spouse becomes, for ABSD purposes, a first time buyer again on their next purchase, even though the household already owns property.
Costs of restructuring include Buyer's Stamp Duty on the transfer value to the receiving spouse, legal fees, potential CPF accrued interest refund on the transferring spouse's share, and often a need to refinance or restructure the existing loan since the remaining owner must qualify for it alone.
On a S$2,000,000 second purchase, the ABSD saving from restructuring first can reach roughly S$400,000, against typical restructuring costs of S$5,000 to S$10,000 plus the transfer stamp duty, but not every couple comes out ahead. A breakeven analysis, comparing total restructuring cost against ABSD avoided, should always be run before proceeding.
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Book a free 30 minute callWinfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.