26 Jul 2024
Source: CPF Board
Selling your home may give the impression of receiving a substantial amount of cash proceeds. However, after repaying your housing loan and other sales-related expenses, you may not necessarily be able to use all the remaining proceeds.
Read on to learn more about what happens to your sales proceeds after selling your home and the answers to some frequently asked CPF-related financial questions!
What happens to your sales proceeds after selling your home?
How much do I have to refund when selling my home?
If you have used your CPF savings to pay for your property, you will have to refund the CPF principal amount withdrawn and its accrued interest.
This includes any housing grants you have received to help you with the purchase and the interest accrued.
If you are age 55 and above and have pledged your property to meet your retirement sum, you will also need to refund the pledged amount.
What happens after I make a refund?
If you are below age 55, your housing refunds are credited to your Ordinary Account (OA). If you are age 55 and above, your housing refunds will first be used to top up your Retirement Account (RA) to your Full Retirement Sum (FRS). The balance refunds will remain in your OA. You may then use the savings in your OA to:
· Earn risk-free interest
· Transfer it to your Special Account (SA) or RA for higher payouts in retirement
· Buy another property or pay for another housing loan
· Withdraw in cash for your immediate needs if you are aged 55 and above
Why do I need to refund the principal amount and interest to my CPF account?
Your CPF savings are primarily meant for your retirement needs. Any CPF funds utilised for purchasing a property will reduce the amount available for your retirement. Refunding the CPF savings used upon the sale of your property to your CPF account preserves these funds for retirement.
For members who are age 55 and above, the housing refunds are used to top up your RA to your FRS and will provide you with higher monthly payouts in retirement.
What if my sales proceeds are not enough to cover the refund amount?
If the selling price after paying your outstanding housing loan is not enough to cover the required CPF refund, you do not need to top up the shortfall in cash if you have sold the property at market value.
However, any option monies (such as an option fee or option exercise fee) that you received from the buyer in cash is considered part of the selling price. Therefore, this amount also needs to be refunded to your CPF account before the transaction can be completed.
How can I reduce the amount to be refunded to my CPF savings when selling my property?
You can make a voluntary housing refund by repaying a portion of your CPF savings used to purchase your home in cash.
This early refund means that you can reduce the CPF savings that need to be refunded to your OA when you eventually sell your property, potentially resulting in more cash proceeds.
Information in this article is accurate as at the date of publication.
