HDB Resale Levy: What Second-Timer HDB Buyers Need to Know

It’s been five years or more since you first moved into your HDB BTO flat. The Minimum Occupancy Period (MOP) is over, and your family has grown since then. It’s time for an upgrade, and you’re considering selling your current place to get a bigger HDB BTO flat. In a perfect world, you’d be able to sell your first flat at a tidy profit, and then have leftover funds to squirrel away after buying your second flat. However, things aren’t that straightforward. You’ll need to factor in the HDB resale levy, and the refund of your sale proceeds back to your CPF account.

HDB Resale Levy: an Overview

HDB Resale Levy: What is it?

The HDB resale levy is a cost that you’ll need to pay when you sell your current subsidised flat to buy another subsidised flat. 

According to HDB, the resale levy is to ensure ‘a fair allocation of public housing subsidies between first-timers and second-timers by reducing the subsidy enjoyed for the second HDB flat or EC’. 

In other words, the HDB resale levy helps to ensure that public subsidies will be allocated fairly between first-timers and those who have already bought subsidised flats. Also note that you’ll need to pay the HDB resale levy in cash. 

How do I know if I need to pay a resale levy?

As long as you bought a subsidised flat from HDB (i.e. HDB Build-To-Order (BTO) or Sales of Balance (SBF) flat) or an executive condominium (EC) from a developer in the past, or received a CPF Housing Grant, you have to pay a resale levy when buying another subsidised flat. 

Simply put, you need to pay a resale levy when you:

• Sell your subsidised flat and buy another subsidised flat from HDB, or;
• Sell your subsidised flat and buy an EC from a developer where the land sale was launched on or after 9 December 2013

However, you won’t need to pay a resale levy if you’re buying any of these:

• A Design, Build and Sell Scheme (DBSS) flat from a developer
• An EC from a developer, where the land sale was launched before 9 December 2013
• An HDB resale flat
• A private residential property

If you are a recipient of the Singles Grant, you will only need to pay half the resale levy amount when you subsequently form a family and purchase a second subsidised flat. 

HDB Guides

If you’re thinking of getting a DBSS or an EC next, why not read our guide to HDB sales launches?

You can find out whether you will be required to pay the HDB resale levy when you register your Intent to Sell using HDB’s Resale Portal. 

How much is the HDB Resale Levy?

The resale levy policy was revised on 3 March 2006, so the amount that is payable depends on when your first subsidised flat was sold. If the flat was sold before 3 March 2006, these are the rates:

(Important note: The HDB resale levy amount is based on the resale price of the sold flat, or 90% of its market valuation, whichever was higher)

*Only applicable to 2-room flat sellers who upgrade to a larger flat type.

If you decide to defer the HDB resale levy payment until you buy another flat from HDB, you’ll also have to pay interest. The prevailing rate for this interest is 5% per annum. However, if you and your spouse are over 55 years of age, you can get this interest waived. 

If your first subsidised flat was sold on or after 3 March 2006, however, then the resale levy amount will be as follows:

These amounts are fixed – this means that whether you’re upgrading, or downsizing your home, you can plan your finances with more certainty. 

Half-resale levy for recipients of the Singles Grant

As you can see from the tables above, if you’ve received the Singles Grant and subsequently form a family, you’ll only need to pay half the resale levy when you get a second subsidised flat or EC.

How do I pay for the HDB Resale Levy?

The final payable amount for the HDB resale levy is only determined when you book your second subsidised flat. You can’t use HDB mortgage financing for the payment of this levy – the only way you can pay for it is in cash, or from the proceeds of the sale of your first flat. 

If you sell your first flat after you have received the keys to your second one, then the resale levy is deducted from the sale proceeds. Any shortfall will have to be paid in cash. If you sell your flat first, then you need to pay the resale levy in cash before you’re allowed to take possession of your second flat.

Resale levy aside, if you want to buy a resale flat with HDB flat sale proceeds, you’ll have to apply for the Enhanced Contra Facility.

What about the refund to my CPF account? 

One of the rules for CPF is that whatever you take out from your CPF account to finance your flat, you’ll need to return it when the flat is sold. 

The amount to be repaid is the principal amount withdrawn plus any accrued interest. Accrued interest is the amount of interest that the money you borrowed to pay for your flat would have earned had it been left in your CPF Ordinary Account (OA). Note that this accrued interest continues to compound even after your flat has been paid off fully. This means the longer you stay in your HDB flat, the higher the interest you’ll have to return to your CPF account. 

To find out the amount that needs to be refunded to your CPF, you can log into the CPF website, and look under the following: 

1. Select ‘My Statement’
2. Look under Section C and select ‘Property’
3. Select ’My Public or Private Housing Withdrawal Details’

Can I buy another resale flat with my flat’s sales proceeds?

HDB offers something known as the Enhanced Contra Facility (ECF), which allows you to sell your existing HDB flat, and buy another resale HDB flat using the sale proceeds and refunded CPF monies at the same time. However, you won’t be able to use the refunded CPF monies to pay for any stamp duties and conveyancing fees. 

The ECF, therefore, allows you to reduce the cash outlay and mortgage loan amount you need to buy a resale flat HDB flat. Note that you can use the cash proceeds from the sale of your flat only when the following criteria are met:

• You’ve already used all the existing balance remaining in your CPF Ordinary Account
• You’ve used up the available CPF monies that were refunded to your CPF Ordinary Account from the sale of your first flat

Cash proceeds basically means the net amount payable to you after the following has been deducted from the sale price:

• Deposit paid
• Outstanding mortgage loan to HDB
• Resale/upgrading levy
• All CPF refunds plus interest
• Other sums due and payable to HDB

More FAQs related to HDB resale levy:

How can I avoid paying resale levy?

You will not need to pay a resale levy if you’re buying any of these:

• A Design, Build and Sell Scheme (DBSS) flat from a developer
• An EC from a developer, where the land sale was launched before 9 December 2013
• An HDB resale flat
• A private residential property

How do I pay my HDB resale levy?

If you sell your first flat after you have received the keys to your second one, then the resale levy is deducted from the sale proceeds. Any shortfall will have to be paid in cash. If you sell your flat first, then you need to pay the resale levy in cash before you’re allowed to take possession of your second flat.

Can I use my CPF to pay for my HDB resale levy?

No, you cannot use your CPF to pay for the HDB resale levy.

Can I buy a BTO unit after selling a resale HDB flat?

Yes, you can purchase a BTO unit after you have met the five years MOP of your resale flat. However, conditions and priority given will be different from first-time BTO buyers. Check out more details here: 6 Important Things to Consider Before Buying a Second HDB Flat in Singapore

For more property news, resources and useful content like this article, check out PropertyGuru’s guides section. 

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