Expert Reviewed Insights with Partnering Lawyers
This article is informed by multiple credible sources:
- Consultation with our independent partnering decoupling lawyers
- References to case reporting from reputable Singapore news outlets
- Citations from established tax and legal commentary online
All information is provided for general educational purposes only and should not be interpreted as formal legal advice.
Goal of this article
The goal of this article is to clarify the legality side of decoupling, addressing what IRAS considers legitimate, what may raise red flags, and how to structure your case with clear commercial substance.
If you are instead looking for a step‑by‑step overview of the full decoupling process and costs, refer to our main guide to decoupling property Singapore.
By gathering insights, case experience and commentary from our panel of decoupling lawyers.
We will address the following
- IRAS stance on what’s legal or illegal
- Case examples provided by lawyer on what’s deem legitimate
- Case examples provided by lawyer on what could potentially raise red flags
We Are Decoupling Expertise
Quick introduction, before you decide to commit the next 5mins reading this article.
We are decoupling expertise, a team of specialist realtor that specialise in helping Singapore property owners derive the best strategy to purchase their second investment property without ABSD.
While decoupling property is often the go-to strategy that property owners adopt. We pride ourselves for helping our client explore and evaluate other alternatives that best suit individual circumstances and objectives.
Drop us a text to explore the best strategy to minimise ABSD on your next property purchase.
IRAS stance on decoupling and commercial substance
Under Singapore’s tax rules, a decoupling arrangement is generally legal if it reflects a genuine commercial purpose , such as restructuring ownership, financing or estate planning , rather than being engineered purely to avoid ABSD.
Is decoupling legal in Singapore ? (Updated with Latest Aug 2025 News Release)
Legal Disclaimer : Please do not take this as legal advice, refer to a qualified legal counsel specialising in decoupling for a formal review of your plans based on your specific circumstances.
A decoupling transaction is legal when the core purpose behind the transaction is driven by a genuine commercial intent, and not a scheme engineered specifically to avoid taxes.
Source : IRAS Tax Guide Section 33
“A tax avoidance arrangement normally involves an arrangement that is artificial, contrived or has little or no commercial substance and is designed to obtain a tax advantage that is not intended by Parliament.”
Furthering this chain of thought, to provide greater clarity. We will examine the definition of commercial substance and provide case examples of transactions that has commercial substance and transactions that lack commercial substance.
Latest News Update
Adding on to this section with latest news release on 02 Aug 2025, pertaining a couple decoupling a property with a 99-1 share split. The court has ruled that it is illegal if the sole purpose of decoupling is to avoid tax.
Similar to the previous cases on the ABSD 99-1 Loophole cases. IRAS has deem schemes intentionally contrived to avoid taxes illegal.
To ensure that decoupling of any share to remain above board, one must ensure that there is a true commercial substance behind the transaction and not solely a scheme contrived to attain a tax advantage.
For more clarification, with regards to this drop us a text to clarify your doubt and we will also refer you to our partnering lawyer for further clarification
Transaction to have commercial substance
For a decoupling property transaction to possess commercial substance, it must fulfil the following criteria.
- It materially changes the legal, economic, or financial position of the parties involved.
- It is done for bona fide (genuine) reasons such as estate planning, risk management, or family restructuring.
- It involves actual transfer of ownership, payment of market value consideration, and real changes to asset control.
Case examples – legitimate intent with commercial substance
These are some examples shared by our panel of decoupling lawyers regarding transactions that possess commercial substance.
Financial restructuring
A couple jointly owned a private property. The husband, looking to unlock his capital locked within the current property, sells his share to his wife.
He then utilises the capital to invest in a business venture or any other form of investment.
Loan restructuring
Husband and Wife are looking to refinance into a new loan with a longer tenure. But due to the husband being older in age is unable to do so.
Husband then decouple and sells his share to his wife. Wife eventually undertook a new loan with a longer tenure solely under her name.
Family planning
A couple is looking to purchase another property to be located within proximity to the child ‘s future primary school.
They will still need to live in the current property as the child Is still attending a preschool nearby.
The couple then proceed to decouple their property.
Summary – Examples of Transaction with Commercial Substance
| Scenario | Why It’s Considered to Have Commercial Substance |
| Unlocking Capital Husband sells his 50% share (worth $1M) to wife to fund a new business or investment | There is a genuine commercial rationale supporting the decoupling transaction. It was executed with the core intent of unlocking capital from the current property to fund the acquisition of another investment asset |
| Asset Distribution Wife buys over the husband’s share to reflect increased financial contribution. | The main intent of the transaction is centered around the intent of asset distribution and proper attribution of investment contribution to actual share allocation within the property. |
| Loan Eligibility Property transferred to higher-income spouses to qualify for better loan terms. | The intent is centered around the objective of loan restructuring, making owner changes to improve financing terms |
| Family Planning Decoupling to purchase second property near child’s future school or aging parents while retaining current home for stay. | There is a non-tax family reason tied to proximity, caregiving, or education. It is rooted in practical lifestyle and housing needs. |
Decoupling is deemed illegal when it’s sole intent is centered around tax avoidance
The recent news reporting of IRAS Investigation into the 99-1 ABSD loophole provides clear precedent on the type of decoupling transactions that is deemed Illegal in the eyes of IRAS.
We have provided extended coverage on these news releases in the following articles
- What is the 99-1 ABSD Loophole and how is it different from decoupling ?
- IRAS 99-1 Investigation – news summary and learnings
What is the 99-1 ABSD Loophole ?
In a nutshell, what is being penalised by IRAS may seem like a typical decoupling transaction in form. But in substance, its core intent is distinctively different.
The 99-1 ABSD loophole comprises of the following steps
- Owner, without any existing property, first purchase 100% share in a new launch condo, without the need to pay any ABSD
- Owner then sells 1% share to another joint owner within a short period of time.
- Joint owner, currently owns a property, but only pays ABSD on the market value of the 1% share
- This tactical move is done with the core intent of avoiding paying ABSD on the 100% share value of property, while allowing better loan financing options to the first owner.
- Typically the 1% joint owner has a higher monthly income and provides access to better loan financing terms.
Lacks commercial substance and is contrived solely to avoid taxes
This 99-1 or more rightfully 100-1 transaction structure raises red flags as the core intent behind the decoupling transaction is solely centered around avoiding ABSD.
The nature of the transaction which involves the first owner selling 1% share to another owner within a short time frame, is usually not supported by any genuine commercial reasons.
Measures that can be taken to ensure legitimacy in the decoupling process
With that in mind, we consulted our legal experts to provide measures that can be taken to ensure legitimacy in our decoupling transaction.
1.Managing timing between purchase of property and decoupling.
Purchasing a property and decoupling within a short time frame, raises red flags. It signals a preconceived plan to avoid ABSD.
Ensuring a reasonable time gap between the purchase of your property and the time in which you decouple would provide a stronger case in justifying commercial intent behind decoupling.
2.Actual flow of payment between buyer and sellers
There should be a traceable and documented flow of funds between buyer and seller. This supports the case where a transaction has commercial substance instead of a pure paper play to avoid taxes.
3.Transacting at market value and at arm’s length
The sale and purchase of part share within the decoupling process must be transacted at market value, based on the valuation established by a professional valuer, supported by actual flow of payment. This provides a case to support the commercial intent behind the transaction.
Is decoupling a property held under 99-1 tenancy in common legal ?
In the earlier sections, we have addressed concerns over legality of decoupling a property held under the conventional 50-50 joint tenancy. In the following sections, we will specifically address concerns over decoupling a property held under the 99-1 tenancy in common structure.
From our experience, readers tend to show greater concern when it comes to decoupling a 99-1 share split, due to its similarity with the cases that IRAS have been investigating.
The general inferred rule of thumb when ascertaining IRAS view of what’s deemed illegal is still based on whether the transaction is founded on an intent with commercial substance and not solely engineered to avoid tax.
Examples of legitimate commercial reasons for adopting a 99-1 tenancy-in-common structure
1. Accountability of financial contribution
A couple jointly purchasing a property. Wife earns a higher income and will be contributing more financially to the purchase of the property.
The couple decides to utilise a 99-1 or 80/20 share split to account for individual financial contribution.
2. Relationship inclusion and estate planning
Husband is the party financing the purchase of the property, but would like to offer his spouse 1% share in the property to include his wife in the property ownership structure.
This is done with the intent of succession planning and relationship inclusion.
3. Loan financing
The inclusion of a spouse within the ownership structure to improve eligible loan quantum and to optimise loan tenure.
Source : Business Times reporting, Legal Opinion on Legitimate cases of 99-1 share split for decoupling
Example of decoupling 99-1 transactions that could raise red flags
Foreigner spouse buying over 1% of Singaporean citizen spouse’s share
Example of this will look like the following
- Singapore citizen and foreigner spouse purchasing a private property
- Foreign buyer ABSD is remiss / waived as purchase is made together with a Singaporean citizen as a matrimonial home
- The purchase is structured in a 99-1 manner, which Singapore citizen holding 1% share
- Shortly after purchase, the foreign couple then buys over 1% share from the Singaporean citizen, paying only 1% ABSD.
This is an example that will raise red flags, as IRAS could deem this as a scheme to avoid ABSD, unless the case is supported by adequate evidence to show genuine commercial intent.
Quick buy-back of 1% shortly after purchase
As mentioned earlier, the time gap between purchase of the property and decoupling plays a role in signalling the intent behind the transaction.
If the decoupling transaction is done immediately after the purchase of the property, It is difficult to justify a true commercial intent or genuine change in financial situation within such a short time.
Source: Straits Times – Case Reporting on Decoupling Transactions that raises red flag
Consequences when decoupling transaction is deem illegitimate
Based on the recent IRAS investigation and the IRAS tax guide. The following are potential penalties property owners could face.
- Recovery of Underpaid Stamp Duty: IRAS will recover the full amount of Additional Buyer’s Stamp Duty (ABSD) that was underpaid due to the avoidance arrangement.
- 50% Additional surcharge on top of ABSD recovered
- Criminal charges for false Information
Source: IRAS Tax Guide
How can an experienced decoupling lawyer assist you ?
If you are currently having doubts over whether your plans to decouple are legitimate, working with a lawyer with experience in the legal aspect of decoupling could help in the following areas.
- Provide 2nd opinion whether your current plan is legitimate
- Assist in setting out property document requirement and flow of funds to ensure that transaction is above board
- Provide property documentation of paper trial
Decouple with confidence
Legal Consultation
- Engage a conveyancing lawyer with proven experience in handling decoupling cases.
- Obtain a second opinion on whether your decoupling plan has genuine commercial substance.
- Ensure all ownership transfers, stamp duty filings, and fund flows are properly documented to withstand regulatory scrutiny.
Tax Advisory
- Consult tax specialists familiar with IRAS rulings who can identify potential compliance risks.
- Clarify the full stamp duty implications – including BSD, ABSD, and SSD – before proceeding.
- Understand how IRAS interprets intent and ensure your case is above board
Legal Disclaimer
This article is for informational purposes only and should not be taken as legal advice. For official advice, always seek consultation from a qualified lawyer with direct experience associated with the legality of decoupling.
If you would like a referral to a trusted decoupling lawyer, drop us a text and we will save you the time of researching one yourself.
More relevant reads regarding the legality of decoupling
- What share split should you consider for decoupling ?
- What happen if divorce after decoupling property?
- Decoupling Lawyer Fees
- Important Legal Details All Property Owners Need to Know Before Decoupling
- Decoupling Property Legal FAQ Session – Circular Law
- How Can I Ensure Decoupling Property Transaction is Genuine
