SINGAPORE – A real estate agent and two buyers of a condominium have admitted to backdating a purchase option (OTP) to avoid paying a higher additional buyer stamp duty (ABSD).
Real estate agent Loy Thye Wei pleaded guilty to one charge under the stamp duty law on Friday (September 3rd). On Thursday, buyers Daniel Halim and Lee Liu Ying pleaded guilty to a similar charge.
All three are Singaporeans aged 44.
The property in question is a fourth floor unit at 163 Jalan Loyang Besar. The address matches that of Sandy Palm, a 99-year leasehold condominium in Pasir Ris.
The court heard that the breaches took place in July 2018, after the government announced a series of cooling measures for the real estate market.
For Singaporeans who buy their third and subsequent residential property, the ABSD rate was 10% until July 5, 2018, but increased to 15% as of July 6, 2018.
ABSD is a tax paid in addition to the existing Buyer’s Stamp Duty (BSD). ABSD and BSD are calculated on the purchase price or market value of the property, whichever is greater.
As Daniel and Lee already owned two properties and their OTP was not granted by July 5, they had to pay 15% in ABSD.
The couple first visited the property on July 7 and proposed to Loy, through their agent Mu Shen, to back date the OTP to July 4.
A search of the Council for Estate Agencies public ledger shows that Loy has been part of the ERA Realty network since 2017, while Mu was previously with PropNex Realty.
During their second viewing on July 8, they agreed to a purchase price of $ 1.38 million and told Mu that they would only proceed with the transaction if the OTP was backdated.
Mu instigated Loy, who then proceeded with the plan despite concerns expressed by the seller of the property.
The couple executed the OTP on July 24 and escaped ABSD $ 69,000 by paying 10 percent of the duties instead of 15 percent.
Daniel’s check for the option fee – a 1% deposit of $ 13,800 – was also illegally backdated to July 4 to lend credibility to the scheme.
For successfully closing the deal, Loy saw his commission drop from 1% to 1.5%. His ill-gotten gains were shared with Mu.
Court documents did not indicate how the offenses came to light, only that the Singapore’s Inland Revenue Authority had received information about the case.
Mu pleaded guilty in July to an accessory charge by prompting Loy to falsely state the OTP date.
Loy, Mu, Daniel and Lee will return to court for sentencing on September 10.
The maximum penalty for each offense of omitting information from the Office of the Prosecutor with intent to evade duty is a fine of $ 10,000 and imprisonment for three years.