All insights

ABSD · Shophouse Worked Examples · 2026

ABSD on shophouses: how the commercial and residential split works, with worked examples

By Winfred Quek · 8 minute read · Published October 2026

Rates checked against IRAS in October 2026 where marked. Figures checked against IRAS pages in October 2026.

The rule that ABSD applies only to residential property is widely known. The part that catches buyers is the arithmetic on a mixed use building, where one price covers a shop or office downstairs and a flat or apartment upstairs. This article does not repeat the general rules on commercial property. It focuses on the calculation, using worked examples, so you can see what drives the bill.

All figures below are illustrations. The split and the rates are the variables that matter, and the real numbers come from IRAS and the sale documents, not from this article.

Step 1: Split the price into the two portions

A mixed use shophouse is treated as two components for ABSD. The residential component is the part used as a home. The commercial component is the part used for business. ABSD applies to the residential component only.

The split is not a number the buyer chooses. It is determined under IRAS rules for apportioning a single price across the two uses, and each BSD scale is applied to its own part. The 60 percent residential and 40 percent non residential split used in this article is an illustrative assumption for the worked examples only. The actual apportionment follows IRAS's method for the specific property. The purchase agreement and valuation reports may show a breakdown, but the figure that counts for ABSD is the one IRAS accepts.

Throughout this article, the price is $3,000,000. For the calculations, the residential portion is assumed to be $1,800,000 (60 percent) and the commercial portion $1,200,000 (40 percent). That is an assumption for illustration only.

Step 2: Apply the ABSD rate to the residential portion

Once the residential portion is known, the ABSD is that portion multiplied by the rate for the buyer's profile. For a Singapore Citizen married couple, the rate depends on how many residential properties they already own:

• First residential property: no ABSD for a Singapore Citizen (IRAS ABSD table).
• Second residential property: 20 percent.
• Third and subsequent residential property: 30 percent.
• Foreigner: 60 percent.
• Entity: 65 percent.

The commercial portion is not multiplied by any of these rates. It is outside ABSD altogether.

Worked example 1: Singapore Citizen couple, second residential property

A Singapore Citizen married couple already owns one residential property and buys a shophouse at $3,000,000. The residential portion is assumed to be $1,800,000 and the commercial portion $1,200,000.

The common error here is applying 20 percent to the full $3,000,000. That gives $600,000, which overstates the bill by $240,000 in this example. The commercial portion is excluded from the calculation, not discounted.

Worked example 2: the same shophouse bought by a foreigner

Now take the same $3,000,000 shophouse with the same assumed split, but bought by a foreign buyer.

The same building costs $1,080,000 in ABSD for a foreigner and $360,000 for a Singapore Citizen couple buying a second property, purely because of the buyer's profile. The split is the same in both cases. That is why the profile and the split must be worked out together, not separately.

Worked example 3: how sensitive the bill is to the split

The table below keeps the price at $3,000,000 and the buyer as a Singapore Citizen couple buying a second residential property at 20 percent. Only the residential share changes.

Each 10 percentage points of residential share moves the ABSD by $60,000 at this price and rate. The last row is not a valid treatment for a true mixed use building. It shows the ceiling, and why an overstated split is expensive. A buyer who relies on a rough split without IRAS confirmation may be surprised by the final figure.

Worked example 4: a pure commercial shop

Take a commercial shop priced at $1,000,000 with no residential component, bought by a foreigner. The ABSD is nil, because no residential portion exists. The purchase still carries non residential BSD, and a GST registered seller may charge GST on the sale. Non residential BSD runs at 1 percent on the first $180,000, 2 percent on the next $180,000, 3 percent on the next $640,000, 4 percent on the next $500,000 and 5 percent on the amount above $1,500,000 (IRAS). The prevailing GST rate is 9 percent (IRAS). The total cost is therefore not zero, even though the ABSD is.

What the examples mean for the decision

Three points follow from the calculations.

First, the split is the most valuable number to understand. A small change in how the price is apportioned moves the ABSD bill by tens of thousands of dollars at a 20 percent rate, and by much more at 60 percent. Get the split confirmed before comparing packages.

Second, the commercial portion is not free. It carries non residential BSD and possibly GST. A higher commercial share lowers the ABSD, but it also changes the income profile, the financing and the resale market. Compare the total cost and the asset, not only the duty line.

Third, the buyer's existing holdings decide the rate. A couple that already owns a residential property is buying a second property, and that changes the rate applied to the residential portion. Whether the residential portion is the second or a later property should be confirmed with a tax adviser against the current holdings, including any jointly owned property.

Common mistakes in the calculation

• Applying ABSD to the full price. The commercial portion is excluded from the ABSD base.
• Assuming the split is negotiable. The apportionment is determined under IRAS rules, so a figure in a sale document does not settle the question by itself.
• Forgetting the commercial costs. Non residential BSD and any GST add to the bill on the commercial part.
• Ignoring the buyer's profile. A split that works for a Singapore Citizen couple can produce a very different ABSD for a foreign buyer.
• Assuming a refund follows automatically. Refund conditions apply to residential property and are time bound, so confirm how they apply to the residential portion before relying on one.

Questions to take to your advisers

1. What apportionment basis will IRAS apply to this building, and what split does it accept?
2. Which ABSD rate applies to the residential portion, given every residential property the buyer holds, including jointly owned property?
3. What non residential BSD and GST apply to the commercial portion, and does the buyer's GST status change the cost?
4. If a refund could apply to the residential portion, what conditions and deadlines apply?
5. Does the whole cost comparison still favour this building once the commercial costs and the expected income are included?

A licensed salesperson can help with the market and the valuation side. A lawyer can check the purchase agreement and the apportionment wording. A tax adviser should confirm the ABSD and BSD treatment for the buyer's exact holdings.

For the wider rules on commercial and mixed use property, read ABSD on commercial and mixed use property. For the sequence question when you already own a home, see sell first or buy first in Singapore.

Frequently asked questions

Is ABSD charged on the whole shophouse price?

No. ABSD applies to the residential portion only. The commercial portion carries no ABSD, but the apportionment method should be confirmed with IRAS or a tax adviser.

Does a bigger commercial share always mean a smaller ABSD bill?

In general, yes, because less of the price is taxed at the residential rate. The commercial share carries its own costs, so compare the total, not only the ABSD line.

If I already own a flat, does a shophouse count as my second property?

Only the residential portion counts toward the residential holdings. Whether it is your second or later residential property depends on what you already own, so confirm with a tax adviser.

Can I claim an ABSD refund on the residential part of a shophouse?

Refund conditions apply to residential property. Whether a refund applies to the apportioned residential amount, and how it is calculated, should be checked against the current IRAS conditions and with a lawyer.

Winfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd, CEA R073319H. The information on this page is general and does not constitute legal, tax, financial or property advice.