Introduction
When purchasing a resale flat in Singapore, prospective buyers may wonder whether they are liable to pay the resale levy. This levy is a one-time payment imposed on the buyer, and its applicability depends on various factors. In this article, we will explore the intricacies of the resale levy, its calculation, and the scenarios under which it is required.
Understanding the Resale Levy
The resale levy is a tax imposed on the purchase of resale flats from the Housing & Development Board (HDB). Its primary purpose is to curb speculation and promote a fair and equitable distribution of public housing resources.
Who is Liable to Pay the Resale Levy?
Not all resale flat buyers are required to pay the resale levy. The following categories of buyers are typically exempt:
- First-time buyers
- Buyers upgrading from a smaller HDB flat
- Buyers who have sold their private property within 6 months of buying the resale flat
Calculation of Resale Levy
For those who are liable to pay the resale levy, the amount payable is determined based on a formula that takes into account the following factors:
- Buyer’s Profile: Factors such as citizenship, marital status, and number of children impact the levy amount.
- Flat Type: The type of resale flat (e.g., 3-room, 4-room) influences the levy calculation.
- Purchase Price: The resale levy is a percentage of the flat’s purchase price.
Formula:
Resale Levy = (Purchase Price - Current Valuation) x Resale Levy Rate
Current Valuation: The HDB estimates the current market value of the resale flat.
Resale Levy Rate: The levy rate varies based on the buyer’s eligibility and the flat’s type and size. Detailed information on the levy rates can be obtained from the HDB website.
Scenarios Requiring Resale Levy Payment
As mentioned earlier, not all resale flat buyers are liable to pay the resale levy. However, there are certain scenarios where payment becomes necessary:
Second-Timers or Subsequent Buyers
If you are purchasing a resale flat but have previously owned an HDB flat or a private property, you may be required to pay the resale levy.
Downgrading from a Private Property
If you have sold your private property and are purchasing a resale flat of a lower value, you may still be subjected to the resale levy.
Flat Acquired Through Inheritance or Divorce
If you inherit a resale flat or acquire one through a divorce settlement, you may need to pay the resale levy, depending on your eligibility and the circumstances of the acquisition.
Concessionary Rates and Payment Options
In certain instances, buyers may be eligible for concessionary resale levy rates. These include:
- Singapore Citizens with Disabilities: A 50% concession on the resale levy amount.
- Families with Special Needs: A waiver of the resale levy if the flat is purchased for a family member with special needs.
Regarding payment options, the resale levy can be paid in installments over a period of up to 15 years. However, the buyer must allocate a sufficient amount of their CPF savings toward the levy payment.
Impact of Resale Levy on Housing Affordability
The resale levy can have a significant impact on the affordability of resale flats. For buyers who are liable to pay the levy, it represents an additional financial burden that can affect their overall housing budget. To mitigate this, the government has implemented various schemes and grants to assist first-time buyers and those upgrading from smaller HDB flats.
Conclusion
Understanding the resale levy is crucial before purchasing a resale flat in Singapore. By carefully considering the eligibility criteria and calculating the potential levy amount, prospective buyers can make informed decisions and ensure that they meet their housing needs while adhering to the government’s regulations.
