Considering that Singapore is one of the wealthiest countries in the world, there may be many situations in which one might choose to give away real estate in Singapore.
It can be a transfer of property to one’s spouse, such as the transfer of flat ownership from a husband to his wife. Transferring property to other family members is possible as well.
Finally, a wealthy person might choose to transfer one of his properties to his child and spouse as a marriage gift. He may simply wish to see his child have a property to call his own during his lifetime. Most commonly, he may choose to give away his real estate to his loved ones after he passes on pursuant to a will.
There are 2 main ways in which this transfer of ownership can take place in Singapore:
- By way of a gift during the donor’s lifetime (known as an inter vivos gift)
- By way of a gift after the donor has passed on, pursuant to a will
Both methods of giving away property in Singapore are fairly common but are there any issues or risks in giving property away in these ways? Taking a step further back, is it even legal to give away real estate in Singapore, and if so, can you give away your HDB flat, or only just private property?
We analyse both situations in turn:
1) Transfer of property by way of a gift during the donor’s lifetime (known as an inter vivos gift).
It is legal to give away real estate in Singapore without receiving monetary compensation. You can give away property by effecting a Deed of Gift between the transferor and transferee.
What about HDB flats?
For HDB flats, the situation is a little trickier. You can only transfer HDB flat ownership to immediate family members who meet certain eligibility conditions. Unfortunately, the rules surrounding transfer of HDB ownership have tightened even more in 2016, and HDB flat owners who wish to transfer their ownership to a family member are no longer allowed to do so except under 6 special circumstances including divorce and financial hardship.
Even though it is possible to give away private property, there are certain risks and issues arising from doing so that a layperson should be wary of.
Is the property under a mortgage or a CPF charge?
There are less considerations to take into account when giving away a property that has been purchased outright.
However, many properties in Singapore tend to be purchased subject to a mortgage and/or a CPF charge. It simply makes more financial sense to do so in most situations, even if you do have the requisite amount of money to purchase the property outright.
As such, if you intend to give away such a private property, it will be prudent to check with your bank and the CPF Board to find out what you have to do in order to be able to make a gift of that property. In certain cases, your bank and/or the CPF Board may not even accede to your request to make a gift of your property unless you redeem your mortgage and you may wish to consult with a conveyancing lawyer to find out more about the options you have in such a scenario.
Are you giving away the property or creating a trust?
Generally, most people tend to instinctively understand the concept that when you give away something, you can’t ask for it back, even if the relationship between the giver and receiver subsequently sours.
Unfortunately, there have been cases in Singapore where there have been disputes over whether the owner truly intended to give away his/her property.
As such, the owner of the property should be certain that he is making a gift of that property and that his true intention is not to create a trust over that property, where the person receiving the property simply holds the property on behalf of the owner.
Stamp duties still have to be paid
While you can give away property in Singapore, you can’t avoid paying stamp duty.
Unless you wish to incur penalties, stamp duty is still payable on the market value of the share of the property to be given away and it’s prudent to obtain a valuation report on the market value of the property to calculate the stamp duty payable.
General procedure to give away property that is NOT subject to a mortgage or CPF charge
- Enter into a Deed of Gift with the person you wish to give the property to
- Stamp and pay the duty of the Deed of Gift for the market value of the property that is to be given.
- Prepare the transfer instrument and file it at the Singapore Land Authority with the relevant title document.
- Lodge a Notice of Transfer with the Comptroller of Property Tax and MCST Board.
2) Transfer of property by way of a gift after the donor has passed on, pursuant to a will
Giving away property through a will tends to be the most common way in which property is given away in Singapore. As people age and accumulate assets, it is only natural to think about providing for your family and friends after passing on.
As real estate tends to constitute the bulk of a person’s estate, property is usually “given” away to close family members after the owner has passed on. However, there are also some issues to take into consideration when making a gift of property through a will.
Is the property held in joint-tenancy?
In Singapore, there are two ways of holding property, as joint tenants or tenants-in-common. Generally, parties who get married usually hold onto their properties as joint tenants whereas parties who look to co-invest in a property might prefer to purchase that property as tenants-in-common.
A person who purchases a property with another person as joint tenants is not allowed to make a gift of his share of the property through a will when he passes on. This is because any property purchased by two or more parties as joint tenants operate based on the law of survivorship. What this means is that when a party who owns a property as a joint tenant with another person passes on, his share of the property is inherited by the other person.
As such, any such property included in a will is not valid as a gift. Unfortunately, this is a common mistake amongst those who draft their own wills.
Is the property held overseas?
In addition to their Singapore properties, wealthy Singaporeans may have properties overseas they wish to give away to their loved ones as well. Generally, a will created in Singapore can include overseas properties as well unless there is a specific clause in the will that it should only cover Singapore.
However, it is generally a good idea to inform the person you’ve chosen to execute your estate about your overseas assets as the executor of your estate will have to look for probate lawyers in the countries where your overseas properties are located to reseal the Singapore grant of probate.