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Resale Levy: 101 Guide to HDB & EC Resale Levy

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Mainly addressed to second timers, resale levy might be one element that shuns many owners away from getting a 2nd subsidised flat from HDB or new Executive Condominium from developers.

What is Resale Levy?

Resale levy is an amount you will need to pay if you are owning or previously owned a subsidised flat or EC and purchase another subsidised flat or EC direct from HDB or developers respectively and is payable in CASH.

Resale levy is introduced to maintain a fair allocation of housing subsidies, reducing the subsidy enjoyed for second timers buying a second subsidised flat or EC.

An easy analogy, every Singaporeans who are eligible, are entitled to One red packet (Ang Bao) from the government. If you have already taken the Ang Bao, and wants to take another, you will have to “return” the previous Ang Bao in the form of levy.

Are You a Second Timer? Do You Need To Pay Resale Levy?

If you had previously owned a new flat purchased directly from HDB or an EC purchased from developer, or received any CPF Housing Grant , when purchasing a resale HDB, then you are already a first timer for that purchase and you will be considered as a second timer for your next subsidised flat or EC purchase. If you purchase a resale flat ONLY with Proximity Grant WITHOUT other CPF Housing Grant, this is not considered a subsidised flat.

If you are already a first timer, purchasing any of the properties below as your next property will not incur any resale levy.

  1. HDB Resale without any CPF Housing Grant.
  2. HDB resale with only Proximity Grant.
  3. DBSS flat from developer.
  4. EC from developer with land sales launched before 9th Dec 2013.
  5. Private Residential Property (Including resale ECs after 5 years from TOP).

If your resale flat is purchased ONLY with Proximity Grant WITHOUT other CPF Housing Grants, you are still considered a first timer on your next subsidised flat purchase.

How Much Is the Resale Levy Amount You Need to Pay?

Sold First Subsidised Flat Before 19th May 1997

If you sold your first subsidised flat before 19th May 1997, instead of a resale levy, there will be a 10% to 20% premium payable when you buy a second subsidised flat or EC. The premium amount is computed base on the date when the first subsidised flat is sold in the open market as below:

Before 31st Oct 1994: 10% of Selling Price
Between 1st Nov 1994 to 19th May 1997: 20% of Selling Price

Sold First Subsidised Flat Between 19th May 1997 and 3rd Mar 2006

If you sold your first subsidised flat between 19th May 1997 and 3rd Mar 2006, resale levy is determined by a percentage of the sales price or 90% of the flat’s market valuation, whichever is higher. Take note that there will be a compounded interest incurred if you chose to defer the resale levy payment until you purchase your second subsidised flat or EC. Refer to table below to determine the percentage of the sales price required based on the housing type of your first subsidised flat.

resale levy bfore Mar 2006

Sold First Subsidised Flat On Or After 3rd Mar 2006

If you sold your first subsidised flat on or after 3rd Mar 2006, the resale levy is a fixed amount depending on the housing type of your first subsidised flat. Refer to table below for more details.

resale levy after mar 2006

Interest On Resale Levy

Unknown to many, there is an interest at the prevailing market rate of 5% per annum charged and compounded for first subsidised flat sold after 19th May 1997 and before 3rd Mar 2006  if you had choose to defer the resale levy payment until you buy another subsidised flat or new EC.

Interest can be waived if you and your spouse are aged 55 and above, sold off your first subsidised flat between 19th May 1997 and 3rd Mar 2006 and looking at right-sizing to a new 3-room or smaller flat. You will be required to pay only the percentage of sales price base on housing type or current resale levy (fixed) amount base on housing type, whichever is higher.

Half Resale Levy

If you purchased your first subsidised under singles scheme and received Singles Grant, you will be required to pay half the resale levy amount when you subsequently buys a second subsidised flat.

Another scenario when you are required to only pay half levy, is when you are a second timer purchasing a subsidised flat with a first timer. i.e in situations of divorce where you owned a subsidised flat previously and are applying for another subsidised flat with your next spouse whom is a first timer.

Note: Resale levy amount is determined by your share on your first subsidised flat. If you own 100% of interest on your first subsidised flat, then half resale levy is not applicable.

When is Resale Levy Payable?

If your first subsidised is sold before taking possession of your second subsidised flat, resale levy is paid in cash upon taking possession of the second subsidised flat.

If your first subsidised flat is sold after taking possession of your second subsidised flat, resale levy will be deducted from the cash proceeds upon the sales of the first subsidised flat. If there are any shortfall, the balance of the resale levy will be paid in cash.

How can You Avoid Paying Resale Levy?

Purchasing Above Mentioned Properties

There is actually no concrete effective way to avoid paying for resale levy. Other than purchasing the above mentioned properties whereby resale levy is not applicable if you are already a first timer.

Making Appropriate Planning On First Timer Status

If you are yet a first timer, making appropriate planning when purchasing with your first timer status will be helpful.

Comparing Grant Amount Vs Resale Levy

Tony is 35 year old and single. His income is $3500 monthly. He intends to purchase a resale 3 room flat with CPF housing grants, including Singles Grant ($25,000) and Enhanced Housing Grant ($12,500). Total CPF Housing Grants adds to be $37,500. If he sells and buys another subsidise flat i.e BTO with a first timer spouse upon MOP, Tony have to pay a resale levy of $15,000.

For Tony’s case, $37,500 received vs $15,000 to return will be seemed worthwhile to utilise his first timer status.

In a different scenario, Peter with a monthly income of $5000 is intending to buy a resale 5 room with CPF housing grant. He is only eligible for Singles Grant $20,000. Likewise to Tony, if Peter decides to sell his flat and apply for another subsidised flat with his future first timer house, he has to pay a levy of $22,500. In Peter’s case, it may not seem worthwhile to apply for CPF Housing Grant.

Reserving First Timer Status For Future

If you noticed, in our examples above, Proximity Grant is not taken into consideration as it is not a determining factor for first timer or second timer status.

By only utilising Proximity Grant for your resale flat purchase, your resale flat is not considered a subsidised flat. If you intend to apply for a BTO after your resale flat reaches MOP, you are still considered a first timer.

It may be one way to plan if you want to “reserve” your first timer status with your future spouse or for retirement but at the same time enjoy some “subsidies”.

Of course there will be other factors and considerations to think about as well i.e if your resale is purchased with HDB Loan and your next BTO is a 2nd HDB Loan. Ensure that you have done a thorough check on these as well.

Special Waiver Of Resale Levy

Quoted from a published article by Ministry of National Development, “HDB assesses the appeals based on the merits of each case and advises the buyers accordingly. HDB does not allow for full waiver of the levy. For those applying for partial waiver, HDB has acceded to about one-third of the appeals. These are usually second-timer households who sold their flats some time ago, and have accrued high interest amounts and face significant financial hardship. So HDB will take into account their family situations and circumstances, and see how best to help them.

In some cases where buyers lack the cash to pay the resale levy, HDB would help by incorporating the resale levy into the purchase price of the second subsidised flat the appellant is buying so that the appellant can subsequently pay the levy by instalments.”

To summarise, the chance of having your resale levy fully waived is less likely and partially waived, only at about 30% and on a case to case basis. However, HDB may incorporate the resale levy into the purchase price to be paid in instalments, subject to appeal and approval.

Final Thoughts

Before purchasing a second subsidised flat or EC, it is always good to check with the authorities to confirm how much resale levy is applicable for you, especially so if you sold off your first subsidised flat before 3rd March 2006.

Paying for resale levy may be or may not be advantageous depending on individual scenarios but having a well laid plan of execution will place you on an edge above.

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