PropNex faces 2 lawsuits from property buyers who were penalised over ‘99-to-1' deals

Singapore Law Watch

28-04-2025

PropNex faces 2 lawsuits from property buyers who were penalised over '99-to-1' deals
Source: Straits Times
Article Date: 28 Apr 2025
Author: Selina Lum
Iras had found the property transactions to be tax avoidance arrangements.
Real estate agency PropNex Realty is being sued by private property buyers who were penalised by the taxman for using the so-called '99-to-1' arrangement to reduce the additional buyer's stamp duty (ABSD) on their purchases.
The property agents and law firms involved in the transactions have also been sued.
In one case, a couple have sued PropNex, property agent Amos Koh and law firm CK Tan Law Corporation.
Mr Kevin Rahim, 28, and Ms Jessica Tjitra, 32, are claiming a sum of nearly $850,000 that they had to pay the Inland Revenue Authority of Singapore (Iras) over their purchase of a unit at Riviere condominium.
In the other case, Mr Melvin Li, 43, has sued PropNex, property agent Ian Sng and law firm City Law.
Mr Li is claiming a sum of nearly $1.2 million he had to pay Iras over his purchase of a 1 per cent stake in his father's condo unit at Piccadilly Grand and in his mother's condo unit at Pullman Residences.
In both cases, the buyers contended that they had relied on the representations made by property agents about the legality of the 99-to-1 arrangement.
PropNex denied that it should be held liable for the acts of the property agents.
ABSD is an extra tax on property purchases that applies to Singaporeans who already own a home, and to permanent residents and foreigners.
The 99-to-1 structure was often used as a tax avoidance arrangement by buyers to reduce the rightful ABSD payable.
The arrangement typically involves a first-time buyer purchasing a property and, within a very short period of time, selling a 1 per cent share of the property to a person who owns another property.
It was used by those who already own a home to reduce the ABSD they pay as co-owner of an additional property.
The Straits Times reported in May 2024 that Iras was set to claw back about $60 million in ABSD and surcharges after it uncovered 166 cases of private property purchases that involved the use of the 99-to-1 or similar arrangements to dodge ABSD.
Couple said they were told it was legal
Mr Rahim and Ms Tjitra, who are from Indonesia, filed their lawsuit in the High Court in February 2025.
The couple, who are now permanent residents, are represented by Mr Gavin Neo of WongPartnership.
They said in their statement of claim that Mr Koh had told them the 99-to-1 method was a legal and workable structure to reduce the ABSD payable.
In July 2022, Ms Tjitra bought the condo unit in her sole name for $3.3 million, shortly after she obtained permanent residency.
The ABSD rate for PRs buying their first property was 5 per cent, compared with 30 per cent for foreigners.
The following month, she sold a 1 per cent share of the flat to Mr Rahim, who paid the 30 per cent rate on only this share.
In August 2024, Iras notified the couple that the arrangement amounted to illegal stamp duty avoidance.
Iras imposed a 30 per cent ABSD rate on the entire purchase price, as well as a 5 per cent surcharge.
In his defence filed in court, Mr Koh admitted making the alleged representations.
He said he learnt of this method from presentation slides prepared by CK Tan Law, and he believed it was a legitimate way to save on stamp duty.
PropNex contended in its defence that Mr Koh was an independent contractor, and not its employee.
It said he undertook that he would be personally liable for any unauthorised acts, wrongdoing, misrepresentations or fraud committed in the course of his work.
The agency added that Mr Koh did not act for the couple; his commissions were paid solely by the developer of Riviere for introducing buyers and brokering sales.
The law firm argued that the possibility that Iras could exercise its powers under the law to vary such an arrangement and impose a surcharge did not make it an illegal arrangement.
The case is scheduled for an administrative hearing on April 30.
Man said he was assured by property agent
Mr Li's lawsuit was filed in January 2025. He is represented by Mr Quek Mong Hua of Lee and Lee.
Mr Sng was the property agent who handled the sale of Mr Li's parents' house and the subsequent purchase of a semi-detached house in the names of Mr Li's brother and sister-in-law.
Mr Li said his parents, who lived with his brother, wanted properties of their own, but were not eligible for a bank loan.
According to Mr Li, his parents were advised by Mr Sng to each buy a unit at the Piccadilly Grand and Pullman Residences.
Mr Sng suggested that Mr Li then buy 1 per cent of both properties, which would enable him to take out a loan in his name.
Mr Li asked Mr Sng over WhatsApp if the transactions were legal, and the agent assured him that he did only 'legal stuff' because his livelihood was at stake.
Mr Li said Mr Sng also told him that the transactions were proposed by his manager and teammates from PropNex, and that they never had any issues.
To further assure him, Mr Sng recommended City Law to act for him and his parents.
Mr Li later sought clarification from Iras after he became aware that it was investigating similar deals.
Iras said his transactions contravened the law, and he was found liable to pay the full ABSD on both properties – at a 17 per cent rate for one, and 25 per cent for the other – as well as surcharges.
A joint defence filed by PropNex and Mr Sng noted that he acted as the marketing salesperson for the developers of both Piccadilly Grand and Pullman Residences.
The defence stated that Mr Sng told Mr Li he had learnt about a method commonly referred to as the '100-sell-1' method – another name for the 99-to-1 arrangement – from training sessions conducted by law firms and bankers.
After checking with law firms including City Law on whether the method could be used for this situation, Mr Sng passed the information to Mr Li.
Mr Sng denied making false representations.
City Law asserted in its defence that it did not advise or affirm that the transactions were legal.
The firm added that by the time it dealt with Mr Li, he and his parents had already committed to the purchases using the 99-to-1 arrangement.
The case is understood to be headed for mediation.
Selina Lum is senior law correspondent at The Straits Times.
Source: The Straits Times © SPH Media Limited. Permission required for reproduction.
Print