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Property agent admits role in backdating an Option to Purchase to evade stamp duties for buyers

Property agent admits role in backdating an Option to Purchase to evade stamp duties for buyers

Screengrab from Google Street View of Sandy Palm condominium complex.

SINGAPORE: In the first case of its kind, a property agent admitted on Monday (Jul 12) that he instigated a seller's agent into backdating an Option to Purchase to evade newly raised stamp duties.

Mu Shen, 50, pleaded guilty to one charge of abetting by instigating co-accused Loy Thye Wei into falsely stating the Option to Purchase date to evade S$69,000 in duty under the Stamp Duties Act.

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

The couple already owned two other properties - a condominium in West Coast Crescent and an HDB flat in Strathmore Avenue - and wanted to buy a fourth-floor apartment at Sandy Palm condominium in Loyang.

Loy was the property agent handling this unit for the seller, court documents stated.

THE RAISING OF THE DUTIES

The Government had announced property cooling measures on Jul 5, 2018, raising rates for the additional buyer's stamp duties. Rates on or before Jul 5, 2018 were charged at 10 per cent for Singapore citizens buying their third and subsequent residential property, while the revised rates that kicked in from Jul 6, 2018 were 15 per cent.

There was a transitional remission for residential properties acquired on or after Jul 6, 2018, where the lower additional buyer's stamp duties applied if certain conditions were fulfilled.

As Mu's buyers already owned two properties, and their Option to Purchase had not been granted on or before Jul 5, 2018, they were supposed to pay the increased additional buyer's stamp duties.

Investigations revealed that Mu's buyers had viewed the property for the first time on Jul 7, 2018. After the viewing, Mu proposed to Loy this scheme of backdating the Option to Purchase.

The couple viewed the property again on Jul 8, 2018, and agreed on the purchase price of S$1.38 million. However, they told Mu that they would only proceed with the transaction if the Option to Purchase was backdated.

Mu knew that the couple wanted to get the transitional remission even though they did not qualify for it. He instigated Loy to backdate the Option to Purchase of the property to Jul 4, 2018, intending to evade the increased stamp duty.

The seller did not know about this scheme, the court heard. 

The cheque issued by Daniel for the option fee, a 1 per cent deposit of S$13,800, was also illegally backdated to Jul 4, 2018 to add a cloak of legitimacy, said the prosecution.

The buyers executed the Option to Purchase on Jul 24, 2018 and evaded S$69,000 in stamp duties by paying 10 per cent of additional buyer's stamp duties instead of 15 per cent.

The seller raised Loy's commission from 1 per cent to 1.5 per cent as she had successfully closed the transaction and obtained a selling price of S$1.38 million. 

Loy and Mu later agreed to share the higher commission that Loy received. Mu has not made any restitution.

Court documents did not indicate how the offences came to light, only that a principal tax investigator with the Inland Revenue Authority of Singapore investigated the case.

Mu will return to court for sentencing next month. For omitting information in the Option to Purchase with intent to evade duties, he can be jailed up to three years, fined up to S$10,000, or both.

Loy is set to plead guilty tomorrow. The cases for the buyers Daniel and Lee are pending.

Source: CNA/ll(ac)

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