The 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 for 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 that straightforward.
Typically, the first time when you'll encounter this is when you intend to sell your first home after your Minimum Occupancy 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.
In this article, you'll learn more about the HDB resale levy, how it works and how much you have to pay.
HDB Resale Levy: an Overview
What is an HDB resale levy?
The cost that you'll need to pay when you sell your current subsidised flat to buy another subsidised flat.
How do you pay the resale levy?
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 if you are a household or single grant recipient: 5% to 25% of the resale price of the sold flat, or 90% of its market valuation, whichever was 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 put in place 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 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.
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
However, you won't need to pay if you’re buying any of these:
A Design, Build and Sell Scheme (DBSS) flat from a developer
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.
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?
There is a fixed resale levy policy that allows you to plan your finances with more certainty, whether you’re upgrading, or downsizing your home.
First Subsidised Housing Type
Resale Levy Amount for Households
Resale Levy Amount for Singles Grant Recipients
Should you and your spouse be aged 55 and above, have sold your first subsidised flat before 3 March 2006, and right-size to a new 3-room or smaller flat from the November 2015 sales launch onwards, you are eligible for the Waiver of Interest for Elderly. You will pay only the percentage graded resale levy, with the interest waived. You can view this amount on the HDB website.
There is a minimum payable amount for different types of HDB flats:
15,000 for 2-room
$30,000 for 3-room
$40,000 for 4-room
$45,000 for 5-room
$50,000 for Executive flat
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 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.
Additionally, 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:
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 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 flat
Cash proceeds basically means the net amount payable to you after the following has been deducted from the sale price:
Outstanding mortgage loan to HDB
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 sell your subsidised flat to buy a Design, Build and Sell Scheme (DBSS) flat from a developer, an HDB resale flat, or private residential property.
How Do I Pay My HDB Resale Levy?
Depending on when you take possession of your second flat, payment is deducted from your flat's sale proceeds and/or cash.
Can I Use My CPF to Pay for My HDB Resale Levy?
No, you cannot use your CPF to pay. The payment has to be in cash or from the sale proceeds of your flat.
Can I Buy a BTO Unit After Selling a Resale HDB Flat?
Yes, but only after you have met the five-year MOP of your resale flat. Your gross household income must also not exceed $14,000 per month and if you've taken a CPF grant, you must pay a resale levy for your BTO flat.
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