What Happens When You Sell Your HDB Flat? Here’s What You Need To Know About It

What Every Singaporean Needs To Know About HDB Sales Proceeds

Considering how in demand the resale market is for HDB flats and other homes in Singapore, you may be thinking of selling your home to upgrade to a new one. But if you’ve had a friend or relative who sold their HDB flat, you probably have an idea of how complicated the HDB selling process is.

Understanding the entire process of selling your home, including what happens when you sell your HDB, is crucial so you can plan your finances accordingly. In this guide, we will walk you through everything you need to know when it comes to selling your flat.

Here at OMY, you will discover the following:

What Happens When You Sell Your HDB Flat: Pre-selling

Before you sell your home, there are some things you must consider.

For example, you must fulfil the 5-year Minimum Occupancy Period. Although you can contact an agent before your MOP has passed, you can only transact after this period. If you’re selling a private property, you must also take into consideration Seller’s Stamp Duty or SSD which applies to sellers that are getting rid of their property three years after purchasing it.

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Aside from the MOP, you must also ensure that the sale of your home is within the Ethnic Integration Policy or EIP and Singapore Permanent Resident quota. You can check the prevailing quotes after registering your intent to sell on HDB’s resale portal.

Before you sell your home, you must also consider what your next home option will be before going forward. Keep in mind that after selling your home, you won’t get the money from it immediately. It may take up to three months for the sale to reflect in your account.

Those who want to sell their HDB and buy another one can take advantage of the HDB Enhanced Contra Facility to decrease their loan requirements or cash outlay. Meanwhile, those who want to buy a private property must plan in place so they can receive the proceeds from their sale before paying for their new purchase.

What Happens When You Sell Your Home: After

Once you’ve decided to finally sell your home, you must think about how much cash you will receive first. This is integral since you may not be left with anything at all. When knowing what happens when you sell your HDB, you have to keep in mind the deductions in your sales proceeds.

First, if you want to sell your house, paying back PCF is crucial. You must return the money that you borrowed from your CPF account to pay for the down payment on your home. This does not only refer to the principal sum of the money, but also the accrued interest, or the interest you would have earned if you did not get the funds. This is 2.5% per year.

You must also settle stamp duty and other charges that you paid for using your CPF funds. Just like the money you paid for the down payment; you also have to pay for the accrued interest.

When it comes to what happens when you sell your HDB, make sure to deduct the monthly loan repayments of your home loan from your total sales. After all, your mortgage won’t magically disappear after selling your flat, assuming you still haven’t paid it in full.

All your outstanding home loan balances when selling HDB need to be paid off 100%. For example, if you sell your flat for S$400,000, and you still have an outstanding balance of S$100,000 for your home loan, then you need to deduct it from your proceeds.

When you are living in your flat and you pay your mortgage through your CPF contributions, refunding this amount is required, as well as its accrued interest. But when it comes to selling fully paid HDB flat, you don’t have to worry about this.

Finally, you need to refund all the perks you got from any CPF Housing grants, and their accrued interest.

While all of these may sound simple, it can get extremely complicated if what you need to “repay” in your CPF and your home loan is higher than the price you’re selling your flat for.

If the sale proceeds of your flat are not enough, you will not get any sales proceeds. You may even incur additional costs when you sell your home.

What Happens When You Sell Your Home: Other Fees

The easiest way to sell your flat is by getting the help of an agent. Agent commission is between 1% to 2% of your home price. For example, if you sold your home for S$1 million, you need to pay the agent up to S$20,000 for commission.

Aside from that, you also have to pay property tax up to the end of the year, and other service and conservancy charges up until the completion of your resale. This is another key part in what happens when you sell your HDB.

How Will You Receive Your Sales Proceeds?

When it comes to the cash proceeds after selling HDB, it will be obtainable through a cashier’s order on the sale’s completion. This can be deposited into your bank account. Meanwhile, your CPF refunds may take up to three weeks to complete.

Where Will You Live?

After you’ve sold your home, you need to think about where you will live next. Ideally, you’ll purchase a new home. If you buy another subsidised flat, you need to pay a resale levy. This can amount to up to S$55,000 for an executive condo. Take a look at this table to see the resale levy. This table is only applicable to flats sold after 3 March 2006.

Flat type Resale levy for households
2-room flat S$15,000
3-room flat S$30,000
4-room flat S$40,000
5-room flat S$45,000
Executive flat S$50,000
Executive condo S$55,000

Selling HDB Flat After 55

When you turn 55 years old, your CPF will automatically have a Retirement Account. The balances from your OA and SA will be combined to create your Full Retirement Sum of S$192,000 (this varies per year. This amount is only for 2022).

If you do not have this money, all refunds that are paid to your OA will go into your RA first. If you want to purchase another property, you are only allowed to use the funds on top of your Full Retirement Sum. However, you may set aside S$96,000 (this varies per year. This amount is only for 2022) for your Basic Retirement Sum. This will considerably affect the CPF balance that you may want to use to pay off your home for your golden years.

Other Things to Keep In Mind

Considering all the expenses listed above, you may be second-guessing selling your home. However, don’t get disappointed just yet.

The key is to find the right balance and ensure you turn a profit. To do this, you may need a little bit of time to wait for the best market conditions. But if certain circumstances require you to leave your home and settle on a price point, you’re not happy with, be prepared to see a decrease in your sales proceeds.

A Word From OMY

Selling a property in Singapore is definitely no walk in the park. Knowing what happens when you sell your HDB is extremely important. Remember that selling your flat doesn’t guarantee you’ll receive a good profit, even if you sell it for more than what you paid.

As much as possible, it is recommended to calculate exactly how much you will be getting from your proceeds when selling HDB flat by taking into account all the refunds and deductions that will be made. This way, you can better prepare for your future expenses. You may use this sales proceed calculator by HDB.

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