Man wants ex-wife to pay back ABSD for buying a second property

A man wanted his former wife to account for over $300,000 in stamp duty that was paid to buy a second property in secret as a preparation for their divorce.

He was upset because he said at least $206,000 of that sum was used to pay the additional buyer’s stamp duty (ABSD) and he noted this could have been saved if he had been consulted.

As the couple were living in a house that was in the wife’s name at the time, he claimed that had he known about his former wife’s intention, he would have asked her to transfer the ownership of the house to him.

After giving up her ownership of the home, the wife would be able to buy the second property without the need to pay ABSD as a first-time Singapore buyer.

But the High Court rejected his argument, which was “not only speculative, but also conjured from hindsight”. As the couple were at the brink of divorce then, the husband might actually object to the purchase of the second property.

Even if he had agreed, the court noted that he might face a problem in getting approval to own a landed property because the 52-year-old Singapore permanent resident, who used to work as an investment analyst, had “retired” when he was around 40, after accumulating millions of dollars in savings.  

The wife, 50, who earns about $25,000 monthly as a senior consultant at a hospital, admitted she had bought the second property because “things were getting dire at home”. As she had contemplated filing for divorce eventually, she said she went ahead to apply for a mortgage to buy the $3.5 million second property on her own without her husband’s knowledge.

It was not disputed that both the house and the second property were matrimonial assets and this meant that the husband would have a share of the real estate.

He was upset because he felt that it was unnecessary to spend over $300,000 to pay for both buyer’s stamp duty (BSD) and ABSD. As he had not agreed to spending such a substantial sum when the parties were planning to split, he wanted the wife to put the amount back to the matrimonial pool with her own money.

He made this request because the couple had been keeping their money entirely separate and would even go to the extent of reimbursing each other for household expenses, including for small payments such as $8.55 for groceries.

But for the $300,000 in stamp duty, the court ruled that the wife did not have to return the sum because doing so would be “an artificial inflation of the pool of assets”.

The court noted that the wife was deemed to have accounted for the stamp duty because the whole property was added to the pool in which the husband had a share.

As the payment of the stamp duty was compulsory in order to buy the second property, the court noted that it would not be fair to add both the value of the property and its acquisition costs to the matrimonial pool.

The couple’s fully paid house was worth about $2.45 million while the $3.5 million second property had a residual value of $1.7 million after deducting an outstanding mortgage of about $1.8 million.

Overall, the couple’s total matrimonial assets, which included mostly cash and investments, were valued at $8.6 million.

As the husband was more cash-rich than the wife, his financial contribution was given a high ratio of 72 per cent. As the couple were deemed to have contributed equally in taking care of the children and the household, the court gave them a similar 50 per cent ratio for indirect contributions.

What this means is that the average ratio of the couple’s overall contributions was 61 per cent for the husband and 39 per cent for the wife.

Here are three lessons on financial planning that couples should know.

Property ownership

So long as a spouse uses his or her property as the matrimonial home, the other spouse is likely to have a share of it, regardless of whether this spouse’s name is registered as an owner.

In the past, there have been several cases involving men who had deliberately not put their wives’ names as joint owners, thinking that doing so would deprive them of a share in the homes.

Recently, a man who did that even prevented his former wife from paying the mortgage for the flat and this resulted in the Housing Board repossessing the home.

Indeed, his unreasonable action, which prevented the flat from being sold at a higher price in the open market, led the court to increase the wife’s share in the flat by 5 per cent, from 20 to 25 per cent of the payment from the HDB.

In the current case, the husband’s name was not even listed as an owner of the house, presumably because the couple did not want the hassle of seeking approval for a foreign citizen to hold a landed property.

But this did not stop him from paying about 96 per cent of the purchase price for his then wife.

Similarly, his name was also not included in the second property which was bought by the wife in preparation for the divorce.

Despite not being listed as an owner of these matrimonial properties, the husband was given credit for his overall financial contributions to the household and this would enable him to stake a bigger claim over all their assets.

Better to have fewer accounts

Even after he had retired for close to a decade, the husband still managed to keep cash savings of over $3 million, which would collectively pay him a bank interest of at least $24,000 annually.

But all his cash was spread out over close to 50 bank accounts here and abroad. For instance, he had fixed deposits ranging from $60,000 to about $200,000 with over 20 different banks.

It was not disclosed why he chose to keep so many bank accounts because many of them were probably not used frequently as the balances were below $1,000.

By spreading his fixed deposits across so many banks, he also missed the chance of possibly getting better rates as a private banking customer if he had put up more money in a chosen bank.

Moreover, it was a chore to keep track of so many accounts and not surprisingly, he had a tough time arguing that the bulk of his savings was accumulated prior to the marriage and should not be considered in the split.

Although he took pains to gather stacks of bank documents, the court found that tracing his assets after more than a decade was “nigh impossible”. So the court ruled that the appropriate solution was to include all his assets for division, but an adjustment to the average ratio would be made to account for the husband’s pre-marital assets.

In the end, the court increased his share by 8 per cent, to 69 per cent, and this meant that he would be entitled to keep about $6 million of the assets. His wife would be entitled to the remaining $2.7 million, or 31 per cent of the share.

Don’t sweat the small stuff

Judges have always advised divorcing couples to be civil and not nitpick over personal items such as jewellery, watches or other branded items unless the total value is substantial.

In this case, the husband actually asked the court to penalise the wife whom he accused of not being upfront in disclosing her jewellery. Even when she did, the total value of her items, which included a diamond engagement ring, jade ring, Patek Philippe watch and Mikimoto pearl jewellery, was about $80,000, or barely 1 per cent of their assets.

The lesson here is that before couples start to be calculative during their divorce, they should check the legal costs for prolonging the case so that they don’t end up spending more to fight for less.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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