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1 Jun 2021
Source: CPF Board
Must you refund your CPF savings used for housing when you sell your home? Find out the answer to this and other common questions related to the sale of your property.
Most home sellers would expect to make a profit when they offload their property in a buoyant market. However, many may not realise that after repaying their mortgages, not all the remaining sales proceeds may be available to them as cash that they can use immediately.
Those who used their CPF savings to purchase their property will have to refund the principal withdrawn, plus accrued interest, to their CPF account after they sell. Any housing grant received, and accrued interest will also have to be returned to their Ordinary Account. If the grant amount to be refunded is more than $30,000, part of that may be credited to the seller’s Special Account/Retirement Account and MediSave Account.
As CPF savings is meant for your retirement needs, any CPF funds utilised for purchasing a property will reduce the amount available for your retirement. This is why you are required to refund the amount that you have used plus the interest accrued on this amount when you sell your home.
Home-sellers must also take other expenses, such as Seller’s Stamp Duty and agents’ commission fees, into account.
Any amount you refund to CPF can then be used to finance your next home or retirement. To help better plan your finances, here are answers to some common questions about what happens to the sales proceeds after selling your home.
Yes. If you tapped into your CPF for your downpayment or to service your housing loan, you will need to refund the principal amount you took from your CPF account, plus accrued interest. This interest amount is equal to what you would have earned, had you kept the money in your account.
The amount refunded will be used to top up your Retirement Account, up to your Full Retirement Sum. Any balance refund beyond the Full Retirement Sum will be paid to you in cash. You can log into the CPF website using your Singpass to find out exactly how much you will have to refund when you sell your property.
All home sellers will have to refund the CPF principal amount withdrawn for housing, plus the accrued interest. However, if you are aged 55 and older and have pledged your property to withdraw your Retirement Account savings in cash, you will need to refund the pledged amount, in addition to the principal withdrawn and accrued interest.
When you sell your flat, you must also refund any housing grant received, along with accrued interest. The housing grant refund will usually be returned to your Ordinary Account. But if you had received more than $30,000 in grants, part of this amount may be credited to your Special Account/Retirement Account and MediSave Account. These funds can then be used for your healthcare and retirement needs under the various CPF-approved schemes.
If the selling price after paying your outstanding home loan is not enough to cover the required CPF refund, you do not need to top up the shortfall in cash if you sold the property at market value.
You can find a fuller explanation of this process in this video.
However, any option money (such as an option fee or option exercise fee) that you received from the buyer in cash when you sold your property is considered part of the selling price. As such, this amount also needs to be refunded to your CPF account before the transaction can be completed.
The order in which your sales proceeds are distributed will depend on the type of property being sold, and when it was purchased or refinanced.
If you purchased or refinanced a private property on or after 1 September 2002, or if you purchased an HDB flat, the refunded amount will be distributed to you and your co-owner’s CPF accounts in the following proportions:
For private properties bought before 1 September 2002 and not refinanced after that, you can find out more about the distribution of refunds.
If you sell a private property within three years of buying it, you will have to pay Seller’s Stamp Duty (SSD). This is set at 12%, 8% and 4% of the property value for homes sold within the first, second and third year of purchase respectively.
No SSD needs to be paid if the property is held for more than three years.
If you used an agent to sell your property, you will have to pay a commission, which is usually 1% to 2% of the sale price. You must also consider other miscellaneous expenses related to the transaction, such as administrative costs (which can range from $40-$80 for HDB flats depending on the flat type) and legal fees (for an HDB flat sold for $500,000, the legal fees paid by the seller can range from $280-$300 depending on the flat type).
Figures in infographic taken from https://dollarsandsense.sg/happens-money-sell-flat-singapore/
Information accurate as at 1/6/2021