By illegally backdating the Option to Purchase, the buyers were able to pay 10% Additional Buyer’s Stamp Duty, instead of 15%, effectively evading $69,000 in stamp duty fees. Source: Google Maps
Property agent, Mu Shen, has pleaded guilty to one charge of abetting by instigating his co-accused, Loy Thye Wei, into backdating an Option to Purchase (OTP) to evade the newly increased stamp duties—making it the first case of its kind, reported Channel News Asia (CNA).
The court heard that Mu, 50, served as the property agent for co-accused couple Daniel Halim and Lee Liu Ying in 2018.
Court documents showed that Loy was the property agent that handled this apartment unit for the seller.
On 5 July 2018, the government unveiled new property cooling measures in which it raised the rates for the Additional Buyer’s Stamp Duties (ABSD). With this, rates for Singapore citizens purchasing their third and subsequent property stood at 15% from 6 July 2018, up from 10% for acquisitions made on or before 5 July 2018.
The new measures provided for a transitional remission for residential properties bought on or after 6 July 2018, where the lower ABSD rates applied, subject to certain conditions.
Mu’s buyers were supposed to pay the increased ABSD since they already owned two properties, and their OTP for the apartment unit had not been granted on or before 5 July 2018, said CNA.
Specifically, Mu’s buyers viewed the apartment for the first time on 7 July 2018 and again on 8 July 2018, when they agreed on the $1.38 million purchase price. However, the couple told Mu that they would only proceed with the deal if the OTP was backdated.
Knowing that the buyers wanted to avail of the transitional remission, Mu then instigated Loy to backdate the OTP for the property to 4 July 2018, with the intent of evading the increased stamp duty.
The court heard that the seller was unaware of this scheme.
To add a cloak of legitimacy, Daniel illegally backdated the cheque he issued for the option fee—which was a 1% deposit of $13,800—to 4 July 2018, noted the prosecution.
On 24 July 2018, the couple executed the OTP, paying only the 10% ABSD instead of 15%. They were able to evade $69,000 in stamp duties.
Meanwhile, Loy’s commission was raised by the seller from 1% to 1.5% for the successful transaction and for obtaining the $1.38 million selling price.
Loy later agreed to share the higher commission with Mu, who has not made restitution.
For omitting information in the OTP with intent to evade duties, Mu can be imprisoned for up to three years, fined up to $10,000, or both. He will return to court for sentencing in August.
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: firstname.lastname@example.org