We Singaporeans enjoy the benefits of housing subsidies when buying a new flat from HDB or a resale flat in the open market with a Central Provident Fund (CPF) housing grant. But when you buy your home for the second time, you receive lesser subsidies by paying the resale levy.
A resale levy is a cost that would be incurred from buying a new flat, that is intended to reduce the subsidy on the second subsidised flat. Resale levy aims to ensure a fair distribution of subsidies between first and second-timers, and prioritise the allocation of subsidies to groups that need them most, such as first-timer families seeking to buy a subsidised new flat to start and nurture a growing household.
Do you need to pay the resale levy?
You need to pay a resale levy in either of these cases:
- You dispose of your first subsidised flat and then buy a second subsidised flat from HDB
- You dispose of your first subsidised flat and then buy an Executive Condo (EC) from a developer where the land sale was launched on or after 9 December 2013.
Are there exemptions from the resale levy?
Good news! You do not need to pay a resale levy if you are buying any of the following:
- Design, Build and Sell Scheme (DBSS) flat from a developer
- EC from a developer, where the land sale was launched before 9 December 2013
- HDB resale flat
- Private residential property
When and how to pay for the resale levy?
The resale levy payable is determined at the point you book your second subsidised flat. It applies regardless of ownership type (joint-tenancy or tenancy-in-common) or shared interest in the flat. Payment can only be made either through your flat sale proceeds and/ or cash. It is important to note that you cannot use your HDB mortgage financing to pay the resale levy.
1. Paid in cash- When selling before the second flat
If your first subsidised flat was sold before taking possession of the second subsidised flat, the resale levy will be paid in cash upon taking possession of the second subsidised flat.
It only makes sense to pay in cash the resale levy once you have disposed of your first flat first before the purchase of the second flat since the price is yet to be deducted from the amount you have transacted your flat at. Hence, cash proceeds are not yet final.
2. Paid from Sales Proceeds- When selling after the second flat
If your first subsidised flat has been sold after taking possession of the second subsidised flat, the resale levy will be deducted from your sale proceeds. Any shortfall -should be paid in cash.
For example, if you have sold your first subsidised property at $500,000, then after reducing your loan amount of $300,000 and CPF refund of $90,000 plus other fees of $3,218, your net sales proceeds will be $106,792. HDB will then deduct the resale levy from this net amount.
If your first household subsidised flat sold on or before 3 March 2006 is a 3-room flat, your resale levy is $30,000. But if your sales proceeds are not enough, you will pay the remaining amount in cash.
How much is the resale levy?
The resale levy amount is fixed, which gives you greater certainty for financial planning when selling your flat. Here’s the various resale levy amount for the first subsidised flat sold on or before 3 March 2006.
| First Subsidised Housing Type | Resale Levy Amount (Households) | Resale Levy Amount (Singles Grant recipients) |
|---|---|---|
| 2-room flat | $15,000 | $7,500 |
| 3-room flat | $30,000 | $15,000 |
| 4-room flat | $40,000 | $20,000 |
| 5-room flat | $45,000 | $22,500 |
| Executive flat | $50,000 | $25,000 |
| Executive Condominium | $55,000 | Not applicable |
Singles Grant recipients only need to pay half the resale levy amount when you subsequently form a family and buy a second subsidised flat. On the other hand, households with subsidised flats will pay more resale levy.
Planning for your next flat should be part of your consideration when selling your current one, which will include financial planning because it plays a very crucial role in your property transaction.
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