Buying property in trust for your child: the 65% question

A parent who wants a property held for a child usually starts from a reasonable premise: the child does not own property, so the child’s ABSD rate should apply. That premise was correct until 9 May 2022. It is no longer how the duty is charged at the point of purchase.

IRAS set the Trustee rate at 35% from 9 May 2022 to 26 April 2023, and at 65% for instruments executed on or after 27 April 2023. That is the headline number, and it is charged on the purchase price or market value, whichever is higher. It is charged whoever the beneficiary is and however sympathetic the family arrangement.

ABSD (Trust) attaches to a living trust. IRAS defines that as a trust created by the settlor within his or her lifetime, and states expressly that it does not include a testamentary trust — a trust made by will, taking effect on death.

The consequence is stark. A will directing that a residential property be held on trust for a child on the parent’s death is not subject to ABSD (Trust). A declaration of trust over the same property, made by the same parent, for the same child, during the parent’s lifetime, attracts 65% at the point of the instrument.

The relief is in the Stamp Duties (Trusts for Identifiable Individual Beneficiary) (Remission of ABSD) Rules 2022, made on 8 May 2022. It does not reduce the rate charged. It refunds part of what has already been paid.

The amount refunded is the difference between the 65% paid and the ABSD payable based on the highest profile among the beneficial owners. IRAS publishes two worked examples. Where the property is bought on trust for a minor Singapore citizen child and it is that child’s first residential property, the total amount refunded is the full 65%. Where the property is bought on trust for a spouse who already owns one property, the refund is 45% — the 65% paid less the 20% that the spouse’s own profile attracts.

That second example is the general rule stated plainly: the post-remission rate is the beneficiary’s own rate. IRAS confirms elsewhere that where a person purchases residential property to be held on trust for an identifiable beneficial owner, the property is included as a count for that beneficial owner. So a second property held on trust for the same child leaves 20% behind after remission, and a third leaves 30%. A minor who is a permanent resident starts at 5% on a first property. A minor who is a foreigner leaves 60% behind. The child’s citizenship and existing count are the variables, not the parent’s.

Everything turns on this definition, and it is narrower than the ordinary meaning of the words. IRAS defines an identifiable individual beneficiary as an individual who is identified in the declaration of trust as a beneficiary, whether solely or with another, and who, because of the trust, has beneficial ownership described in these terms.

An individual entitled in remainder or reversion is excluded from that definition. Three further categories are expressly not identifiable individual beneficiaries.

1. 01An individual not yet born at the date of the declaration of trust. A trust for "my children and any future children" fails on the unborn ones.
2. 02An individual entitled only to the income of the property. An income-only interest is not beneficial ownership for this purpose.
3. 03An individual whose interest is contingent or discretionary, or who becomes entitled only on revocation of the trust. This rules out the ordinary discretionary family trust.

Read together, the definition and the exclusions describe a narrow instrument: a fixed, immediate, irrevocable beneficial interest in a named living individual. Most of the flexibility that makes a trust attractive as an estate-planning tool is the very flexibility that disqualifies it here.

This is the detail that catches families who have done everything else right. A parent settling property on a young child will usually want the child’s interest to vest at some later age — 21 is the conventional choice. It is a sensible instinct. It also forfeits the refund.

IRAS addresses the point directly in its published FAQ. A declaration of trust for a minor child whose beneficial interest in the property will only vest at the age of 21 does not qualify for the remission.

So the arithmetic on a $2 million property is 65% — $1.3 million — kept by IRAS rather than refunded, because of a clause the family thought was protective. The clause is drafted before the instrument is stamped and cannot be repaired afterwards by amendment. This alone is why the trust deed has to be settled by a solicitor who has read the remission rules, before any option to purchase is exercised.

The second condition does the work here. IRAS states it as a condition of the remission that the ABSD chargeable on the instrument has to be paid before remission can be granted. There is no waiver at the point of stamping, no provisional assessment, and no netting off.

IRAS requires an instrument executed in Singapore to be stamped within 14 days after execution, and one first executed overseas to be stamped within 30 days after it is first received in Singapore. So the full 65% has to be in the account and paid within a fortnight. IRAS then states that most applications are processed within 2 months of receiving complete information, with the refund issued within 1 month after approval.

Applications go through myTax Portal, under Request, using the option to apply for assessment or appeal for waiver, with the trust instrument and the option to purchase or sale and purchase agreement attached. Miss the 6-month window from the date of execution and the third condition fails. The refund is gone whether or not the trust itself was drafted perfectly.

The declaration of trust is itself a chargeable instrument, and how it is charged depends on whether it moves beneficial ownership.

The $10 figure is quoted often and misunderstood almost as often. It applies where nothing moves — a bare confirmation of an existing beneficial position. A declaration that puts a child into beneficial ownership of a property is a change in beneficial interest, and ad valorem duty applies to it.

Renunciation under section 22C

Unwinding is not free either. Where a beneficiary renounces an interest in residential property held on bare trust on or after 10 May 2022, section 22C of the Stamp Duties Act treats the property as resulting back to the settlor, and IRAS requires the settlor to pay BSD and ABSD on that transfer back — assessed on the settlor’s own profile and count.

For a parent who already owns their home, that is a second ABSD charge at 20% or 30% on the way out, on a property they paid 65% to put in. There is also Seller’s Stamp Duty to consider on any onward sale within the holding period. IRAS charges SSD on residential property purchased on or after 4 July 2025 at 16% within the first year, 12% in the second, 8% in the third and 4% in the fourth, with none after four years.

The reason has a statutory root and a market-practice conclusion, and it is worth keeping the two apart. The statutory root is capacity. Section 35(1) of the Civil Law Act 1909 gave an 18-year-old full contractual capacity from 1 March 2009. Section 35(4) then carves specific things back out.

Two things follow directly from that text. A young person below the age at which capacity is conferred cannot validly contract to buy or mortgage land. And limb (c) means the beneficial interest under the trust cannot be pledged as collateral for any purpose — which removes the security a lender would otherwise take against the interest the child actually holds.

There is one published prohibition that is directly relevant, and it catches a large share of the families who ask about this. HDB states that during a flat’s minimum occupation period, acquiring private residential property to hold on trust for another person, or being a beneficiary of a property held on trust, is also not allowed. A family still within MOP cannot use this structure at all, in either direction.

It is also worth being clear about what "the child takes over at 21" means, because the phrase circulates as though it were a rule. There is no statute we could point to that vests legal title in a beneficiary at 21. What is published is that HDB requires proposed flat owners to be at least 21, that applicants for letters of administration must be at least 21, and that IRAS treats vesting at 21 as deferred vesting that disqualifies the ABSD (Trust) remission. Those are three separate rules, and none of them is a general rule about trusts.

The structure is legal, published and used. It is also unforgiving, and the points of failure are documentary rather than financial.

1. 01Settle the trust deed with a solicitor before the option to purchase is exercised. The vesting language decides whether 65% is refunded or kept, and it cannot be fixed afterwards.
2. 02Confirm the beneficiary is an identifiable individual beneficiary on IRAS’s definition — named, living at the date of declaration, holding a fixed and irrevocable interest, not income-only, not contingent, not discretionary.
3. 03Have the full 65% available in cash for the 14-day stamping deadline, and plan on the money being out for several months. IRAS states most applications are processed within 2 months and the refund follows within 1 month of approval.
4. 04Diarise the 6-month application deadline from the date of execution of the instrument.
5. 05Check the exit before the entry: section 22C on renunciation, and SSD if the property may be sold within the holding period.
6. 06If any HDB flat in the household is still within its MOP, stop — HDB prohibits both holding on trust and being a beneficiary during that period.

Where the duty at stake is material — and at 65% of a residential purchase price it always is — get IRAS’s own view before the instrument is executed, through the assessment route on myTax Portal. A solicitor drafts the deed; the Commissioner decides the duty. Those are two different jobs and neither belongs to an estate agent.