Is It Worth It To Pay ABSD?

 Here’s an interesting case study.

I’ve always wondered if it is really worth paying ABSD to own another property.

The issue here is that we have our current forever home in joint name.

Decoupling sounds mafan, but probably will save us some money since any Additional Buyer’s Stamp Duty (ABSD) is surely more expensive than the decoupling share purchase.

Then recently I chanced upon this unit at Siglap V, a tiny freehold condo which just got me thinking for fun.

The 500+sqft unit is trying to sell for $920K but is also asking for $3.2K monthly rent. A check on URA’s website shows me that last transaction of the same size was only $800K.

This means if I can get the unit for $800K and then subsequently rent it out at $3.2K, I actually earn a yield of 4.8%!

However if I factor in having to pay ABSD, which is currently 20%, that means I have to pay $960K for the unit. This translates to a rental yield of 4.0%.

Somehow it sounds not bad and it makes me a multiple property owner never again. This means paying the ABSD over the mafaness of decoupling might not be as sever?

Sure maybe I will end up having to pay more than $800K for the unit? Maybe I cannot get a rental of $3.2K and have to settle for less. I still have to pay maintenance and any charges for large expenses incurred by the unit, which will eat into my yield. 

But still.

Is my math not mathing here?

Maybe go viewing for fun :)