If you sold your HDB flat for $380,000 and got less than that after the sale, you’re not alone.
First-time HDB sellers may not know this, but when you put your home on the market and make a sale, you will not receive the full amount of your sale proceeds. We’ll go into this in detail, but—
First things first: Remember to meet the MOP before selling
Before you can sell your HDB flat, remember that you have to meet the Minimum Occupancy Period (MOP), which is five years for HDB flats. This means you’ll have to occupy your house for a minimum of five years before being eligible to sell it.
Now that you’ve sold your flat, what happens to your sale proceeds?
Once you’ve sold your HDB flat, your sale proceeds (the money you get after the sale) will be divvied up to:
- Pay the outstanding home loan
- Return CPF monies
- Resale levy (if any)
For this article, we’ll be zooming into number two-returning your CPF monies to your account as the rest of the calculation is more straightforward in comparison.
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On CPF refunds plus accrued interest
It’s compulsory to return any CPF funds you have used back to your CPF Ordinary Account (OA), plus the accrued interest-the amount of money it would have earned had it not been used to finance your home purchase. The current CPF-OA interest rate is 2.5% per annum.
Having to pay the accrued interest of your CPF monies, on top of the interest you already pay for your home loan, can lessen the amount of money you’ll get after selling your home (also known as cash proceeds). For some, this could be an essential deciding factor in their next housing plan. So if you’re decided on selling yours, then you should understand the breakdown of the sale proceeds of your flat.
How does CPF affect your sale proceeds?
If you had applied for and received a CPF grant to finance your HDB flat purchase, you need to repay that amount (on top of whatever amount that you have used from your CPF OA), plus accrued interest, when you sell the flat.
What happens if the sale proceeds are not enough to refund your CPF fully?
If you sell your flat at or above the market value, you are not required to top up the shortfall of your CPF refund.
However, if you were to sell the flat below the market value, then you may be required by CPF to top up the difference—even if it means paying out of your pocket.
Go here to check how much you need to refund to your CPF account upon the sale of your flat.
So here’s a scenario:
Mr and Mrs Lim are selling their HDB flat for $380,000, with the help of an Ohmyhome Super Agent.
Here’s the breakdown of how your sale proceeds will look like:
Selling Price: $380,000
Outstanding Loan Amount (HDB): $180,000
CPF Refund (Mr Lim): $70,000
CPF Refund (Mrs Lim): $70,000
Resale Levy (if any): NA
Total Cash Proceeds from HDB: $60,000
Legal Fee (HDB): $500*
Ohmyhome Professional Fee (incl. 7% GST): 1% of selling price + GST= $4,066
HDB Admin Fee: $80
Nett Cash Proceeds: $55,354
*HDB legal fee is estimated, and the final amount is subjected to HDB’s calculation.
When do you need to include the HDB resale levy in your calculation?
The HDB resale levy only applies to those who are buying a second subsidised flat from HDB. This can be a BTO, a Balance of Sale flat, or an Executive Condominium (EC). The amount of Resale Levy varies depending on the housing type.
The resale levy needs to be factored into the calculation as it can only be paid in cash or sale proceeds.
Dive Deeper: Guide to Buying an HDB: Resale Levy
Have a financial plan before selling your HDB flat
Selling your HDB flat to purchase new property is not merely “upgrading”. Not really. There are a lot of long-term factors that could affect your financial situation in the future, which could either make or break your bank, as well as your housing options. From the interests of home loans and grants to the miscellaneous costs and fees, it would be best to work out a thorough financial calculation with a trusted advisor before plunging into anything.
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