A Beginner’s Guide To The HDB Resale Levy

It’s no secret that home buyers in Singapore are some of the luckiest in the world. Singaporeans enjoy tons of government subsidies that make being a homeowner easy and affordable. But what happens if you want to sell your HDB flat to buy a new one?

In other countries, when you sell your home, you would enjoy a huge profit. But in Singapore, you have to deal with the HDB levy.

So what is the HDB resale levy, and how to avoid the resale levy? We’ll discuss all this information below.

• What Is HDB Resale Levy?
• Do I need to pay a resale levy for resale?
• How Much is the HDB Resale Levy?
• How to Avoid Resale Levy? Is it possible?
• How Can You Pay Your HDB Resale Levy?
• What Happens to Your CPF Account?
• Can You Purchase Another Resale Flat With the Proceeds From Your First Flat?
• Case Study About HDB Resale Levy

An HDB Levy refers to the cost you need to cover when you have to sell your subsidised flat to get another subsidised flat. This rule was put in place by the Housing Development Board to ensure a reasonable allocation of the country’s public housing subsidies between first and second-timers by decreasing the subsidy enjoyed by people for their second flat or EC.

Considering this, the resale levy is important to achieve fair public subsidies. Keep in mind that the HDB resale levy needs to be paid in cash.

Now that you know what is HDB resale levy, you may be asking “Do I need to pay a resale levy for resale?

If you bought an HDB BTO, SBF flat, or an EC from a developer, or you have received a CPF Housing Grant before, then you need to pay an HDB resale levy if you want to buy a subsidised flat. The covered grants include:

• First-timer applicant grant
• Half housing grant or top-up grant
• Non-citizen spouse scheme grant
• Single Singapore citizens applicants grant
• Joint singles scheme or orphans scheme grant

If you bought your flat with the Proximity Housing Grant, it’s not considered subsidised.

The flat covers (as long as it is subsidised):

• Flat bought from HDB
• DBSS flat from a property developer
• EC unit from a property developer
• Resale flat bought with a CPF Housing Grant
• Other forms of housing subsidy (such as those enjoyed under the SERS, or privatisation of HUDC estates, and others)

Keep in mind that if you bought a BTO flat from HDB, an SBF from HDB, and an EC from a developer, these properties are considered subsidised even if you did not get any housing grants to

pay for them. Why? Because these are priced lower compared to the market rate thanks to the subsidy the Singapore government gives on its original land price.

More from OMY: BTO vs Resale Flats: Which Is Better?

In short, there is a need to pay for an HDB resale levy if you have bought a subsidised property in the base, and you want to get another one.

But what if you are a recipient of the Singles Grant or any of the grants listed above? This is a great way on how to avoid resale levy, albeit only half. If this applies to you, you will only need to pay for half of the resale levy when you form a family and buy a second flat.

If you want to know whether you need to pay for the HDB levy, you will find out when you register your Intent to Sell on the HDB portal.

When it comes to how much you are required to pay when it comes to the HDB resale levy, the amount varies depending on your housing type, as well as the makeup of your household.

For most homes, the amount usually ranges from S$7,500 to S$55,000. However, if your subsidised home was sold before 3 March 2006, you need to pay for the HDB levy based on a percentage amount, which usually falls between 5% to 25%.

Take a look at the table below to see how much you need to pay for the HDB levy.

For those sold before 3 March 2006:

* – this is only applicable to two-room flat sellers who want to upgrade their home to a larger flat.

For those sold on/after 3 March 2006:

Now, the question you may have is this: can you avoid your resale levy? After all, it can get extremely expensive. Thankfully, the answer is yes.

Take a look at this table below for a quick look at how to avoid resale levy.

Based on the table above, not all home buyers need to pay the HDB resale levy. For instance, you can avoid it if any of these scenarios apply to you:

• You’ve sold your private property and you want to buy a subsidised flat.
• You’re purchasing your first-ever subsidised HDB flat.
• You’re purchasing a resale from the open market without using any grants.
• You’re buying a DBSS flat.
• You’re buying a resale EC.
• You’re purchasing private property.

As mentioned above, if the second home you’re purchasing is also subsidised, then you cannot avoid the HDB resale levy unless you’re in dire need of financial help. If this applies to you, you can seek the help of HDB by appealing your case.

You may also be eligible to waive your HDB resale levy if you sold your first flat between 19 May 1997 and 3 March 2006, or if you downsize to a new 3-room or smaller flat. For these cases, you just need to settle the Percentage Graded Resale Levy. The interest on your delayed payment will also be waived to help you save more money.

Your payment will only be determined once you book your second subsidised home. It’s not possible to use your home loan/CPF for the payment of the HDB resale levy, and the only way you can pay for it is through cash, or from the proceeds of your first flat’s sale.

If you sell your first flat before you get the keys to the second flat, you need to settle the HDB levy fully in cash upon taking possession of your second home. You need to pay this amount between signing your Agreement for the Lease and getting your keys.

But if you bought a second flat before selling your property, the HDB levy will be deducted by the HDB from the cash proceeds upon your first home’s sale. If there’s any shortfall, you need to pay for it in cash. You will receive a payment notice from HDB.

All payments must be paid by cashier’s order, a cheque issued directly by banks. You need to submit this alongside the Payment Notice to any HDB branch office or hub in your area. You may also request a cashier’s order with your bank.

But if you’re buying an EC from a developer as a second property, the payment will be made through the EC developer. They will be in contact directly with HDB on your behalf.

This is another common question of homeowners in Singapore. The rule is that whatever you have taken out from your CPF to put into your flat needs to be returned after the home has been sold.

You must repay not only the principal amount but also its accrued interest or the money that would have been earned if you did not take that money out from your CPF Ordinary Account. Remember that the accrued interest will compound even after the flat has been paid off completely. Considering this, you need to return a larger amount to your CPF the longer you stay in your flat.

Checking the amount you need to pay is very. Just log in to your CPF account, click “My Statement,” check Section C, select “Property,” and click “My Public or Private Housing Withdrawal Details.”

Under the HDB Enhanced Contra Facility or ECF, you are allowed to sell your existing flat and purchase another resale HDB flat using the proceeds and refunded CPF money. Keep in mind that you won’t be allowed to use your refunded CPF money to settle stamp duties and other conveyancing charges.

You may also only the cash proceeds from the sale of your HDB flat as long as you meet these criteria:

• You’ve used up the balance in your CPF OA
• You’ve used up your available refunded CPF monies (refunded to your OA from the sale of your first subsidised flat)

The cash proceeds refer to the net amount payable after these charges have been deducted from the sale price of your flat:

• Deposit
• Resale/upgrading levy
• Outstanding HDB mortgage loan
• CPF refunds and interest
• Other charges to HDB

For you to understand the HDB resale levy better, take a look at this case:

A married couple, Person A and Person B, bought their first subsidised home together in 2002. It was a 4-room BTO flat. They sold it on 2 March 2007 for S$250,000, and the market valuation was lower than the sale price. Persons A and B also chose to defer the payment of their HDB resale levy until they bought another flat from HDB.

In 2003, they bought a private property and made it their home. However, they want to sell this property in 2022 and buy a 3-room BTO flat.

Considering the HDB resale levy rules, they need to pay an HDB resale levy of S$40,000. In 2022, the total amount they would have to pay is S$84,548.

As you can see, Persons A and B not only have to settle the resale levy of S$40,000, but they also have the pay for the huge interest compounded at 5% per year on top of that because they deferred their HDB levy payment. However, if they are both over 55 years old, they may request to waive the extra interest fee.

Now that you know what an HDB resale levy is, you can better prepare for this additional cost. In conclusion, the housing market in Singapore is still incredible, and the HDB resale levy simply assured that government subsidies will remain fair.

More From OMY: The Complete Guide To The New Singapore Property Cooling Measures