When you sell your HDB flat, it’s not a straightforward process. Anyone who has been through the process of selling their HDB flat or even attempted research in that area can attest the start-to-end process is no walk in the park.
Given how ‘hot’ the HDB resale market is and prices being at an all-time high in 2024, you may be considering selling your HDB flat in hopes of turning a nice profit. Maybe you have a freshly MOP-ed flat and want to take the opportunity to upgrade your home while the market conditions are still favourable.
To help you better understand where your money goes when selling your HDB flat, we’ll take you through the different financial milestones. From pre-flat sale to flat sale, post-flat sale and new flat purchase, here’s how your sales proceeds are affected. If you’re all ready to sell your HDB flat, let us help.
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What Are Sales Proceeds?
HDB sales proceeds refer to the cash you receive from selling your HDB flat, after deducting any outstanding loan, CPF monies used with accrued interest, other legal and agent commission fees, and penalties.
You can use an online calculator to check your HDB sales proceeds on the HDB website. Knowing how much you could potentially get may help you decide if it’s the right time to sell your HDB flat.
When selling your HDB flat, know the flow of money is not straightforward. To guide you through the process, here’s a summary of what selling your HDB flat looks like and how your proceeds are affected at each step.
Before Selling Your HDB Flat
As with most other property-related transactions in Singapore, the first step prior to selling your flat is checking if you meet the eligibility criteria, you’ll need to:
- Fulfil the Minimum Occupation Period (MOP), which will defer depending on how you first purchased your flat.
- Ensure that the sale of your flat is within the Ethnic Integration Policy (EIP) and Singapore Permanent Resident (SPR) quota. Prevailing quotas can be checked after you register your HDB Intent to Sell on the HDB Flat Portal.
- Check if additional requirements apply if the flat sale is on the basis of declaring bankruptcy or filing a divorce.
Your HDB Intent to Sell is valid for 12 months and must be valid when you are granting the Option to Purchase (OTP) to your potential buyers. After you have registered your HDB Intent to Sell, you will be able to download a copy of the OTP and view your estimated sale proceeds.
Want to know more about how to sell your HDB flat? Check out our guides.
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1. Find out How Much of Your Mortgage Is Left after Selling Your HDB Flat
Your mortgage doesn’t automatically go away the moment you sell your HDB flat, assuming you are not quite done paying it off.
Any outstanding home loan will need to be fully paid off and the balance will be deducted from selling your flat. For instance, if you sell your HDB flat for $400,000 and your outstanding home loan is $100,000, your estimated cash proceeds will be $300,000.
Sounds easy? Things could get tricky if your outstanding loan amount is higher than what your flat sold for. If the sale of your flat is insufficient, the balance of your home loan will need to be paid in cash. In this case, not only do you receive $0 in sales proceeds, but you also incur added costs.
2. Calculate How Much CPF You Have Used from Buying HDB Flat
There are different ways to finance an HDB flat and using CPF monies is a common way. CPF funds can be used to cover the downpayment in part or in full, pay the conveyancing and other legal fees from a flat purchase, and also finance the monthly mortgage.
Whatever way it’s used, CPF funds will have to be returned with interest back into the CPF Ordinary Account (OA), or in some cases, the Retirement Account (RA). Besides the accrued interest, housing grants that you received while buying the flat will also need to be credited back into your CPF account.
So, let’s say your flat sale price is $400,000. But your outstanding home loan is $100,000 and the total CPF amount used with accrued interest and housing grants received amounts to $200,000. That means your estimated cash proceeds will be $100,000.
The accrued interest can be calculated based on the prevailing 2.5% per annum rate for OA, which is compounded annually. If you’re unsure how to calculate this, no worries. You can check your accrued CPF interest using the CPF mobile app.
Unlike your mortgage, any shortfall doesn’t need to be supplemented with cash. However, the buyer’s deposit of up to $5,000 will be used as part of the CPF refund.
Fees and Taxes When Selling Your HDB Flat
While we’re on the topic of deductions, there are other fees that you may incur when you sell your HDB flat:
- Legal fees are based on the appointed solicitor
- Seller’s stamp duty if ownership is by way of transfer
- Property tax up to the end of the year
- Service and conservancy charges up to the date of resale completion
All that said, nothing will impact your proceeds more than the price you sell your HDB flat.
3. Figure out How Much to Sell Your HDB Flat
So you’ve registered the HDB Intent to Sell and find you are definitely eligible to sell your HDB flat. Upon having your HDB Intent to Sell registered, you will be told when you can grant an OTP to buyers. Then all that’s left is figuring out how much to sell your HDB flat for.
Finding the right balance between a reasonable resale price and what will turn a good profit can be tricky and will depend on the reasons why you’re selling the HDB flat.
In order to generate good profit, some patience may be required in waiting for the optimal market conditions. Meanwhile, circumstances requiring you to move out quickly may lead to hasty decisions. For instance, you may quickly ‘settle’ on a price which could result in diminished sales proceeds.
Most crucially, you will want to avoid selling your HDB flat below HDB’s valuation.
How to Determine Your HDB Flat Valuation
If both the valuation and selling price are higher compared to when you first purchased the flat, the likelihood of successfully paying off your loan and CPF refunds while maintaining a healthy proceeds margin is fairly high.
That’s because if the agreed-upon selling price is above the HDB valuation, the buyer will have to pay you the difference, known as Cash-Over-Valuation (COV), in cash.
However, there is no straightforward way to exactly determine HDB valuations. HDB doesn’t openly publish this data, and you only receive the valuation after you and the buyer agree on a price and sign the OTP. What you can do to estimate your HDB flat’s value is to check out recent sale trends and statistics. Or you can use the PropertyGuru free valuation tool.
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If your selling price is equal to the flat’s valuation, your sales proceeds are then dependent on how the sale price compares with the original price of the flat.
In case you sell your HDB flat at a loss while equalling HDB’s valuation of the flat, you will not need to top up your CPF refunds in cash should there be a shortfall. However, this will mean fewer CPF monies available not only for your next property purchase but also for your retirement fund.
Ideally, you would want to avoid a situation where the selling price is below valuation. In this instance, you will have to top up the shortfall in CPF refunds in cash if your proceeds are insufficient to cover the outstanding home loan and CPF monies.
Case Study for How to Calculate Estimated HDB Sales Proceeds
| Original flat price | $350,000 |
| When selling: | |
| Agreed upon flat sale price | $400,000 |
| HDB valuation | $380,000 |
| COV received | $20,000 |
| To be deducted: | |
| Outstanding home loan | $100,000 |
| Total CPF with accrued interest and housing grants received | $200,000 |
| Overall HDB sales proceeds received: | |
| Estimated cash proceeds | $100,000 |
4. Settle the Buyer’s Deposit When Selling Your HDB Flat
While not quite as impactful as the selling price itself, the buyer’s deposit (option fee + option exercise fee) may come in handy.
The deposit can amount to up to $5,000, which is paid upon granting and exercising of the OTP and may be used to pay back the CPF funds utilised if the proceeds are insufficient.
After Selling Your HDB Flat
Taking from the above example, after much deliberation and negotiation, you’ve successfully sold your 4-room HDB flat at $400,000.
Not only have you managed to sell it above the original flat price, but the agreed selling price is also above market value. After paying off your outstanding home loan and refunding your CPF monies, and with no penalties incurred, your estimated proceeds are about $100,000.
While it’s a nice cash boost if you don’t have to worry about buying another property, chances are, you’ve been house hunting for your next home while working towards the sale of your flat. The proceeds you received from the sale of your flat may then be used to finance your new property.
But before that can happen, how will you receive your profits? If you’re wondering “when will I get my cash proceeds after selling my HDB flat?” we’ll address that in the next section.
5. Receive Your Sales Proceeds After You Sell Your HDB Flat
The answer to “When will I get my cash proceeds after selling my HDB flat” is on the day of sale completion. Sales proceeds are obtainable via a cashier’s order on the day of sale completion, which can immediately be deposited into a bank account. In the meantime, your CPF refunds will take about two to three weeks to process.
While receiving and depositing your proceeds is a straightforward process, how do you go about utilising it, especially if your flat sale and new home purchase are happening at the same time?
6. Buy Your Next Property after Selling Your HDB Flat
Depending on what sort of property you intend to buy after you sell your HDB flat, the resale levy may be applicable to you. Specifically, it depends on whether you’ve sold a subsidised flat and intend to buy a second subsidised housing.
HDB defines subsidised housing as any of the following:
- A flat bought from HDB
- A resale flat bought with CPF housing grants
- A DBSS flat bought from a property developer
- An Executive Condominium (EC) unit bought from a property developer
- Other forms of housing subsidy (e.g. enjoying benefits under the Selective En bloc Redevelopment Scheme (SERS), privatisation of HUDC estate etc.)
In short, if you are buying a resale flat on the open market, or upgrading to private property, the resale levy won’t apply to you. In such instances, your proceeds can be utilised in any cash payments, such as for the new property’s downpayment and OTP.
If you plan to buy a resale HDB flat, the Enhanced Contra Facility is a scheme that facilitates the concurrent buying and selling of your old and new flat. The scheme channels your proceeds and CPF refunds from the sale of your old flat into the purchase of your new one.
That seems convenient, but an important caveat is that the CPF monies cannot be used to pay stamp duty and conveyancing fees in your new flat purchase. In addition, your proceeds will only be utilised after your existing CPF balance, including the CPF refunds, has been exhausted.
You may wish to consider applying for a bridging loan, which allows buyers who need to ‘bridge’ the gap between the time they need to pay the downpayment for their new property and when they receive the proceeds from their previous property.
Your HDB Sales Proceeds May Not Be the Profit You Expect
Contrary to what you might have thought, selling your HDB flat at a higher price than you paid doesn’t immediately guarantee that the difference will be the profits you receive. It’s important to account for all the deductions and refunds that will be incurred and to calculate beforehand how much of your actual sales proceeds will be available for your next property purchase.
If you still decide you want to sell your HDB flat, you may want to a property agent to represent you. Find the right agent and tap into their expertise by browsing agents listed on PropertyGuru’s agent directory.
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