Woman Used Goddaughter as Nominee to Skip ABSD on S$3M Apartment – Key Lessons for Property Buyers
A woman asked her “goddaughter” to buy a S$3 million apartment on her behalf, then used the infamous 99-to-1 scheme to skip paying the full Additional Buyer’s Stamp Duty (ABSD) on the purchase. The arrangement unravelled during divorce proceedings barely five months later, with the High Court ordering her to pay the outstanding ABSD and penalties – a cautionary tale for anyone tempted to use sham arrangements to avoid property taxes.
Apartment Value
Sham Arrangement
ABSD + Penalties Owed
Before Divorce Filed
What Happened: The Sham Arrangement
The woman, a 54-year-old sales director, arranged for her adult goddaughter to buy a second property in her sole name in November 2022. Although the goddaughter was listed as the buyer, the purchase was fully funded by the woman – through borrowings from her father and a bank loan.
The pair later signed a “deed of acknowledgement of trust” to establish that the goddaughter bought the property as the woman’s nominee. The goddaughter had to give 1 per cent of its value to the woman so she could apply for a bank mortgage under the 99-to-1 arrangement.
Because the woman took over only 1 per cent of the property, the transfer would seemingly attract ABSD on just that minute share on paper. In the goddaughter’s sworn statement, she confirmed that she had made no financial contributions towards the acquisition or maintenance of the apartment, and that all payments were made by the woman.
AsianPrime Insight: The Inland Revenue Authority of Singapore (IRAS) has explicitly described such transactions as sham arrangements “because they serve no purpose other than allowing existing owners to avoid paying 99 per cent of the ABSD.” If you are found using this scheme, you will have to pay the full ABSD plus an additional surcharge of 50 per cent. It is never worth the risk.
How It Unravelled During Divorce
The arrangement came to light during the woman’s divorce proceedings, filed in November 2022 – barely five months after the purchase. Her then-husband, who co-owned their matrimonial home worth about S$3 million, contested the arrangement.
High Court Judge Teh Hwee Hwee questioned whether the relevant assessments had been “adequately assessed” and whether the ABSD for the purchase of the property had been fully paid. The woman’s lawyer replied that “such an assessment had been done” but this was not disclosed in the court’s judgment.
The court ordered the woman to pay the outstanding ABSD and penalties, which could come to about S$800,000 in the second property scenario. The property was also still included in the matrimonial pool because the wife was the true owner who paid for everything.
AsianPrime Insight: Divorce proceedings are one of the most common triggers for sham arrangements being exposed. When assets are divided, courts require full disclosure – and nominee arrangements inevitably surface. We have seen this pattern repeatedly: what seems like a clever tax-saving move becomes a massive financial liability when life circumstances change.
Debt Reduces the Value of Assets
The case also highlights how debt erodes the real value of property holdings during asset division. The woman had a S$3 million home but an outstanding mortgage of S$1 million, reducing the net worth to only S$2 million. After factoring in the debt on both properties, including the ABSD liability, the actual distributable value shrank significantly.
This is why the value of luxury cars and property in many divorcing couples’ cases is rarely what it appears on the surface. After considering depreciation of cars and outstanding bank loans, it is common to see a value below S$500,000 for assets that appear far more impressive on paper.
AsianPrime Insight: When we advise clients on property purchases, we always stress the importance of understanding net equity versus gross value. A S$3 million property with a S$2 million mortgage is only S$1 million of real wealth. This distinction matters hugely for financial planning, especially for couples buying jointly.
Risk of Over-Leveraging on Properties
The article also cites a case where a couple were happily living in their S$2 million unit until the wife had problems paying off the mortgage. They chose to buy a second S$3 million property.
To avoid paying ABSD on the new property, the husband transferred his share in their home to the wife so that he could be the second property’s sole first-time owner. At the time, the couple had an outstanding loan of S$500,000 on their existing home. The wife applied for a further S$750,000 mortgage so that her husband could use the extra cash for the second property.
This extra loan lifted the total mortgage to S$1.25 million, but the monthly repayment of about S$8,000 was still manageable due to the low interest rate of 1.2 per cent. However, when the husband’s business hit a bad patch, he defaulted – and because the second home was in his sole name, the couple lost it. The wife was left retrenched and had to settle for a new, lower-paying job.
AsianPrime Insight: If you need to come up with a scheme to avoid ABSD, it is a sign you may be overstretching your budget. The last thing you should do is come up with a dubious scheme to hold the property for you so you can avoid paying the additional buyer’s stamp duty. Always stress-test your mortgage at 4 per cent interest, not today’s low rates – because rates can and do rise.
Frequently Asked Questions
What is a 99-to-1 arrangement and why is it risky?
A 99-to-1 arrangement involves transferring 99 per cent of a property to a nominee (such as a family member) while the real owner holds just 1 per cent on paper, reducing the ABSD payable on the transfer. IRAS treats these as sham transactions and imposes the full ABSD plus a 50 per cent surcharge if discovered.
What happens if IRAS discovers a sham ABSD avoidance arrangement?
The true owner must pay the full ABSD that would have been payable, plus an additional surcharge of 50 per cent on top. For a S$3 million property, this could amount to around S$800,000 or more depending on the buyer’s profile and number of existing properties.
Can using a nominee to buy property lead to other legal problems?
Yes. Nominee arrangements often surface during divorce proceedings, debt recovery or estate disputes. Courts require full asset disclosure, and the true ownership will be revealed – potentially triggering ABSD penalties, stamp duty on transfers, and complications in asset division.
What should buyers do instead of trying to avoid ABSD?
Work within the rules. Consider decoupling legally where appropriate, review your overall portfolio strategy, and consult a qualified property advisor and lawyer before making any structural arrangements. If you need a complex scheme to afford a purchase, it may be a sign you are over-leveraging.
Source: The Straits Times, 3 May 2026. This article has been rewritten and adapted by AsianPrime Properties for educational and informational purposes.
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