SINGAPORE: In the first case of its kind, a real estate agent admitted on Monday (July 12) that he had instigated a seller’s agent to backdate an option to buy in order to avoid newly levied stamp duties.
Mu Shen, 50, pleaded guilty to an accessory charge of inciting co-defendant Loy Thye Wei to misrepresent the option date to avoid the $ 69,000 stamp duty tax.
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 West Coast Crescent condo and an HDB condo on Strathmore Avenue – and wanted to buy an apartment on the fourth floor of the Sandy Palm condo in Loyang.
Loy was the real estate agent who managed this unit for the seller, the court documents say.
THE INCREASE IN OBLIGATIONS
On July 5, 2018, the government announced measures to cool properties and increased the stamp duty rates for the additional buyer. On or before July 5, 2018, Singapore residents who bought their third and subsequent residential property were charged 10 percent, while revised prices were 15 percent as of July 6, 2018.
For residential properties that were acquired from July 6th, 2018, there was a transitional decree in which, under certain conditions, the lower additional purchaser’s stamp duty applied.
Since Mu’s buyers already owned two properties and their option to purchase was not granted on or before July 5, 2018, they should pay the additional buyer’s increased stamp duties.
Investigations revealed that Mu’s buyers first viewed the property on July 7, 2018. After the inspection, Mu suggested that this scheme of back-dating the Loy purchase option be set.
The couple toured the property again on July 8, 2018 and agreed on the purchase price of 1.38 million SGD. However, they advised Mu that they would only proceed with the transaction if the purchase option was retroactive.
Mu knew the couple wanted to get the transitional waivers even though they hadn’t qualified for it. He got Loy to backdate the option to purchase the property to July 4, 2018 in order to bypass the increased stamp duty.
According to the court, the seller was unaware of this regulation.
Daniel’s check for the option fee, a 1 percent deposit of S $ 13,800, was also illegally backdated to July 4, 2018 to add a cover of legitimacy, prosecutors said.
Buyers exercised the option to purchase on July 24, 2018, bypassing $ 69,000 stamp duty by paying 10 percent of the additional buyer’s stamp duty instead of 15 percent.
The seller increased Loy’s commission from 1 percent to 1.5 percent as she successfully completed the transaction and had a sale price of S $ 1.38 million.
Loy and Mu later agreed to share the higher commission Loy received. Mu did not make amends.
Court documents did not reveal how the crimes came to light, only that a chief tax investigator for the Singapore Inland Revenue Authority was investigating the case.
Mu will return for trial next month. Failure to provide information in the purchase option with the intent to evade his or her duties may result in a prison sentence of up to three years, a fine of up to SGD 10,000, or both.
Loy will plead guilty tomorrow. Proceedings for buyers Daniel and Lee are pending.