HDB resale levy and the refund of your sale proceeds back to your CPF account are two factors to consider when selling your HDB flat when buying another one. 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. Alas, things aren’t always that straightforward.
Typically, the first time when you’ll encounter this is when you intend to sell your first home after your Minimum Occupation Period (MOP) is over. Reasons for moving could vary from needing more space to accommodate a growing family, to wanting to move to a better location.
HDB resale flats are a popular option for second-time homebuyers, who may have a preferred estate to buy from, and the desire to move into their HDB flats immediately after buying them. However, according to the PropertyGuru Consumer Sentiment Study H1 2023, this, high interest rates (i.e. high borrowing costs) and record-high HDB resale prices are among the reasons why 31% of Singaporeans are now considering BTO flats, an increase from 16% in H1 2022.
If you feel similarly, you may consider a Sales of Balance Flats (SBF) or Open Booking of Flats (OBF) unit instead. Alternatively, you could upgrade to an Executive Condominium (EC), another popular HDB flat type. Regardless of your ultimate choice, as long as you sell your current HDB flat and buy another subsidised flat from HDB or an EC, you’ll need to pay HDB resale levy.
HDB Resale Levy: An Overview
|What is it?||The cost that you’ll need to pay when you sell your current subsidised HDB flat to buy another subsidised HDB flat.|
|How do you pay for it?||The resale levy is deducted from your sale proceeds, and 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.|
|How much is it?||Depending on the flat type and whether you are a household or single grant recipient: 5% to 25% of the resale price of the sold flat (depending on the HDB flat type), or 90% of its market valuation, whichever is higher.|
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 levy was implemented 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 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 For HDB Resale Levy?
If you bought a subsidised flat from HDB (i.e. a BTO or SBF flat) or an EC from a developer in the past or received a CPF Housing Grant, you will have to pay a resale levy when buying another subsidised flat.
Subsidised housing is:
- A flat bought from HDB
- A resale flat bought with a CPF housing grant
- A Design Build and Sell Scheme (DBSS) flat bought from a property developer
- An EC unit bought from a property developer
- Other forms of housing subsidy (e.g. enjoyed benefits under the Selective En bloc Redevelopment Scheme (SERS), privatisation of HUDC estate etc.)
So, you have to pay 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
If you are a recipient of the CPF Housing Grant for Singles, you will only need to pay half the resale levy amount when you subsequently form a family and purchase a second subsidised flat.
You can determine whether you will be required to pay the HDB resale levy when you register your Intent to Sell on the HDB Resale Portal. Once you are inside the HDB resale portal, there are nine steps in total for you to complete. Don’t worry, the HDB resale portal is fairly straightforward.
How Much Is the HDB Resale Levy?
The resale levy amount depends on whether you sold your first subsidised flat before or after 3 March 2006.
Subsidised HDB Flat Sold on or After 3 March 2006
|First subsidised housing type||Resale levy amount for households||Resale levy amount for singles grant recipients|
|2-room HDB flat||$15,000||$7,500|
|3-room HDB flat||$30,000||$15,000|
|4-room HDB flat||$40,000||$20,000|
|5-room HDB flat||$45,000||$22,500|
Check out how much HDB resale levy you’ll need to pay if you sold your first HDB flat before 3 March 2006.
How Do I Pay for the HDB Resale Levy?
The final payable amount is only determined when you book your second subsidised flat. You can’t use your home loan or CPF 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, you must pay the resale levy in cash upon the key collection to the second subsidised flat.
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:
- Select ‘My Statement’
- Look under Section C and select ‘Property’
- 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 (e.g. Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD)) 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 OA
- You’ve used up the available CPF monies that were refunded to your CPF OA from the sale of your first HDB flat
Cash proceeds mean 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
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