What's Happening?
A Chinese man and his Singaporean girlfriend are suing a real estate agency, an agent, and a law firm for over S$406,285 due to a '99-1' property transaction. This arrangement, which was intended to minimize stamp duties, involved one co-owner holding 99% of the property and the other 1%. The couple, Liu Yu Tong and Zhang Han Ming, were advised by property agent Chan Chee How and Pertinent Law that this was a legal method to avoid additional buyer's stamp duty (ABSD). However, the Inland Revenue Authority of Singapore (IRAS) later identified the arrangement as tax avoidance, resulting in a penalty. The couple claims they were misled about the legality of the arrangement, while the defendants argue that the couple was aware of the risks and that the arrangement was a common
practice recommended by law firms.
Why It's Important?
This lawsuit highlights the complexities and potential pitfalls in property transactions, especially those involving tax avoidance strategies. The case underscores the importance of understanding legal and tax implications in real estate deals, particularly for foreign buyers or those with complex financial arrangements. It also raises questions about the responsibilities of real estate professionals and legal advisors in ensuring clients are fully informed of the risks involved. The outcome of this case could influence future practices in the real estate industry, particularly regarding the use of '99-1' arrangements and similar strategies.
What's Next?
The case is currently being contested in court, with both parties presenting their arguments. The court's decision could set a precedent for similar cases in the future, potentially affecting how real estate transactions are structured and the advice given by professionals in the industry. If the couple wins, it may lead to increased scrutiny of real estate practices and possibly stricter regulations to prevent tax avoidance. Conversely, if the defendants prevail, it may reinforce the current practices but also highlight the need for buyers to seek comprehensive legal advice before engaging in complex property deals.
