What happens when you sell property that you previously paid with CPF?

By EdgeProp Singapore

/ EdgeProp |

October 2, 2018 5:00 PM SGT

Many Singaporeans use their CPF savings to finance their homes, but have you ever wondered what happens if you decide to sell your property?

Firstly, if you are planning to sell your HDB, you need to make sure that you have first fulfilled the Minimum Occupation Period (MOP) before you engage a property agent or go about marketing your home on your own.

If you’re selling a private property, you have to consider the Seller’s Stamp Duty (SSD), which will be 12%, 8% and 4% of the property value for homes sold within the first, second and third year of purchase respectively.

Once you’ve made the decision to sell your home, you need to consider how much you will actually receive in cash with the sale of the property (SPOILER: you don’t get to keep the full amount from your sale).

1) Refunding the money you “borrowed” from your CPF account

If you had used your CPF savings for the purchase of your property, you will be required to make refunds into your CPF account when you sell your property.

For instance, if you had used your CPF to pay for your down payment and/or service your housing loan, you will need to refund the principal amount you took from your Ordinary Account (OA), plus an accrued interest equal to what you would have earned had you kept the money with CPF.

The amount to refund to your CPF account will depend on your age at the time of sale, transfer or disposal of your property.

i) If you are below 55 years old

If you’re below the age of 55, you will need to refund the CPF principal amount withdrawn plus the accrued interest ("P+I"). The breakdown is detailed in the table below:

Source: CPF

ii) If you are 55 years old and above

If you’re aged 55 and above, you will need to refund the CPF principal amount that you withdrew for housing purposes plus accrued interest ("P+I").

In addition, if you had pledged your property to withdraw your Retirement Account (RA) savings in cash, you will need to refund the pledged amount on top of the P+I. According to CPF, the amount refunded will be used to top up your RA, up to your Full Retirement Sum. Any balance housing refunds after this will be paid to you in cash.

Source: CPF

In any case, you may log into the CPF website using your SingPass to determine the amount you will have to refund to your CPF account when you sell your property.

2) Buying your next property using CPF

After you have sold your property, you may use the refunded CPF savings to purchase your next property or redeem another housing loan with your CPF savings.

i) If you are below 55 years old

Those within this age bracket may use savings in their Ordinary Account, including the refunded amount, to purchase your next property or redeem another housing loan.

ii) If you are 55 years old and above

According to CPF, you can use your CPF savings in the following accounts to purchase your next property or redeem another housing loan:

a) Ordinary Account (OA) savings. The refunds from the sale of your earlier property will be used to top up your Retirement Account (RA), up to your Full Retirement Sum. After this, any balance housing refunds will be paid to you in cash within one week after the CPF refunds are paid into your CPF account.

Alternatively, you may request for the balance housing refunds to remain in your OA to pay for your next property or redeem another housing loan. It is important to note that the request has to be made at least two weeks prior to the completion of the sale of your property.

b) Retirement Account (RA) savings in excess of your Basic Retirement Sum.

3) What are some things to consider before using your CPF to buy a home?

While you can use your CPF savings to finance your property purchase, you should not be using all your CPF OA savings to pay for your home. This is because your CPF savings are essentially for your retirement, and the more you use it for property, the less you will have for retirement.

It is also important to keep in mind the things that you may be servicing with your CPF OA savings, such as your children’s local tertiary education and insurance premiums. You also need to consider the reduced CPF contribution rates as you age.

Finally, it is important to note that you have to be insured under the Home Protection Scheme or a mortgage insurance when you use CPF for the monthly instalment of your housing loan.

Also read: Guide to Using CPF for Private Residential Properties

Try our Sale Proceeds Calculator: How much sale proceeds will I receive from selling my property?

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