Understanding the Resale Levy
The Resale Levy is a one-time charge imposed on the sellers of HDB resale flats. It aims to capture part of the potential profits from the sale of such flats and distribute them to eligible buyers of new HDB flats.
Eligibility for Resale Levy Payment
Generally, the seller of an HDB resale flat is required to pay the Resale Levy if:
- The flat was purchased under the:
- Enhanced CPF Housing Grant Scheme (EHG)
- Additional CPF Housing Grant (AHG)
- Special CPF Housing Grant (SHG)
- Proximity Housing Grant (PHG)
- CPF Housing Grant (CHG) before August 2006
-and-
- The seller has not reached the Minimum Occupation Period (MOP) of 5 years.
Calculation of Resale Levy
The Resale Levy is calculated based on the following factors:
- The type of grant received
- The number of years since the MOP was reached
- The selling price of the flat
The Housing and Development Board (HDB) provides a Resale Levy Calculator to estimate the potential levy payable.
Transition Timeline for Resale Levy
The Resale Levy policy has undergone several revisions over the years to address market conditions and equity issues. The latest transition timeline is as follows:
| Year | Policy |
|---|---|
| 2025 onwards | Resale Levy payable if flat was purchased under EHG, AHG, SHG, PHG, or CHG before August 2006 and the seller has not reached the MOP. |
Common Mistakes to Avoid
- Assuming you are not eligible: Always check with HDB to confirm your eligibility status, especially if you are unsure about the grant you received or whether you have reached the MOP.
- Overestimating the levy payable: Use the HDB Resale Levy Calculator to get an accurate estimate of the potential levy.
- Paying the levy late: The Resale Levy must be paid before the completion of the resale transaction. Late payments may result in penalties.
Pros and Cons of Paying Resale Levy
Pros:
- Contributes to the affordability of new HDB flats for eligible buyers.
- Prevents excessive profits from being made on the resale of subsidized flats.
Cons:
- Adds to the financial burden of sellers who have not fully enjoyed the benefits of their grants.
- May discourage the sale of resale flats, leading to a reduction in market liquidity.
FAQs
1. Can I avoid paying the Resale Levy?
No, if you meet the eligibility criteria, you are legally obligated to pay the Resale Levy.
2. What happens if I sell my flat before reaching the MOP?
You will need to pay the Resale Levy and may also incur additional penalties.
3. Can I use my CPF savings to pay the Resale Levy?
Yes, you can use your CPF Ordinary Account savings to pay the Resale Levy.
4. How do I know if I received a grant?
You can check your HDB records or contact HDB directly for confirmation.
5. What is the purpose of the EHG, AHG, SHG, PHG, and CHG schemes?
These schemes were introduced to help lower-income households and first-time homebuyers purchase HDB flats. They provide financial assistance in the form of grants.
6. How is the Resale Levy calculated?
The Resale Levy is calculated based on the type of grant received, the number of years since the MOP was reached, and the selling price of the flat.
7. When do I need to pay the Resale Levy?
The Resale Levy must be paid before the completion of the resale transaction.
8. What are the consequences of not paying the Resale Levy?
Late payments may result in penalties and legal action.
Market Insights
According to HDB, the Resale Levy policy has helped to maintain a stable and affordable public housing market in Singapore. In the first half of 2023, the average Resale Levy paid was approximately $25,000. The highest average Resale Levy was paid for flats in mature estates, such as Toa Payoh and Queenstown.
Conclusion
Understanding the Resale Levy is crucial for sellers of HDB resale flats. By complying with the eligibility requirements and accurately calculating the levy payable, sellers can avoid potential financial penalties and contribute to the affordability of public housing in Singapore.
