Real estate agent admits playing role in backdating call option to evade stamp duty for buyers

SINGAPORE: In the first such case, a real estate agent admitted Monday (July 12) that he had instigated a seller’s agent to backdate a call option to escape the newly increased stamp duty.

Mu Shen, 50, pleaded guilty to aiding and abetting charge by causing co-accused Loy Thye Wei to falsely declare the date of the call option to evade S $ 69,000 in rights under the rights law stamp.

The court heard that Mu was the real estate agent acting for co-defendants Daniel Halim and Lee Liu Ying in 2018.

The couple already owned two other properties – a condominium in West Coast Crescent and an HDB apartment at Strathmore Avenue – and wanted to purchase an apartment on the fourth floor of the Sandy Palm condominium in Loyang.

Loy was the real estate agent who managed this unit for the seller, according to court documents.

RIGHTS INCREASE

The government announced property cooling measures on July 5, 2018, raising the buyer’s additional stamp duty rates. Rates on or before July 5, 2018 were charged at 10% for Singapore citizens purchasing their third and subsequent residential properties, while the revised rates that came into effect on July 6, 2018 were 15%.

There was a transitional rebate for residential properties acquired on or after July 6, 2018, where the buyer’s lower additional stamp duty applied if certain conditions were met.

Since Mu buyers already owned two properties and their option to purchase was not granted by July 5, 2018, they were expected to pay the buyer’s additional stamp duty.

Investigations revealed that Mu buyers first viewed the property on July 7, 2018. After the visit, Mu offered Loy this pattern to backdate the purchase option.

The couple reviewed the property on July 8, 2018 and agreed to the purchase price of S $ 1.38 million. However, they told Mu that they would only proceed with the transaction if the call option was backdated.

Mu knew the couple wanted transitional remission even though they were not eligible for it. He prompted Loy to backdate the option to purchase the property to July 4, 2018, intending to evade the increased stamp duty.

The seller was not aware of this scheme, the court said.

Daniel’s check for the option fee, a 1% deposit of S $ 13,800, was also illegally backdated to July 4, 2018 to add legitimacy cover, the prosecution said.

The buyers executed the call option on July 24, 2018 and escaped S $ 69,000 in stamp duty by paying an additional 10% stamp duty instead of 15%.

The seller increased Loy’s commission from 1% to 1.5% as she successfully completed the transaction and obtained a sale price of S $ 1.38 million.

Loy and Mu then agreed to share the higher commission that Loy received. Mu made no return.

Court documents did not indicate how the offenses were discovered, only that a senior tax investigator from Singapore’s Inland Revenue Authority investigated the case.

Mu will return to court for his sentence next month. For omitting information in the call option with the intention of evading his duties, he can be jailed for up to three years, a fine of up to S $ 10,000, or both.

Loy will plead guilty tomorrow. The files of buyers Daniel and Lee are pending.

Penny D. Jackson