HDB Resale Levy: when and why

Perhaps you’ve read HDB Resale Levy: What Second-Time Flat Buyers Need To Understand Before Buying Another Flat from DollarsAndSense.sg.

Image credit: DollarsAndSense.sg

Reading the numbers, the facts and figures, you’re scared to consider buying your second flat, crushing your dreams to upgrade your living space.

But hold on! As much as the article is scary and could instil doubts into your mind, I invite my friend, Fayyadh Muhammad, Group Director at PropNex Singapore, to share his thoughts and possibly address your concerns.

Second-Time Flat buyers need to pay Resale Levy?

This statement is true and false at the same time. I am not saying that this article is wrong. In fact, this is a really good article and a good reference to understanding Resale Levy.

However, to commoners who have purchased their first one and only HDB flat, they may miss the details written in this article. At the same time, not having full understanding what is happening in the HDB Resale market, this article will definitely scare them.

Take a deep breath, relax, and read it slowly.

No, you do not always have to pay Resale Levy for your second HDB Flat, in fact it seldom happens; if you are like most of the Singaporeans with their property transactions.

Put it this way: in 2012 you decided to tie the knot, and booked a BTO 4 room flat. In 2015 you got the keys. Upon fulfilling your Minimum Occupation Period in 2020, you decided to upgrade to a 5 room flat.

Situation 1: you sell your current flat and proceed to purchase a 5 room flat from the resale market, probably at $450,000. And this whole process can be completed in the year 2020 itself.

Situation 2: you decide to book a BTO again! Now Resale Levy kicks in, because this is a subsidised flat. You buy it cheaper, $400,000. But you have to pay a Resale Levy of $40,000 in cash. Making the purchase a sum of $440,000. Not much of a difference in price. On TOP of that, you will have to wait another 3 years or so to get your keys, and then live in the house for another 5 years more for your MOP to complete. Making that a total of 8 years.

So, first situation:

  • bought at $450,000
  • able to sell in 2025

Second situation:

  • bought at $440,000
  • able to sell only in 2028
  • $10,000 cheaper but 3 years on lost opportunity

Generally, people will choose Situation 1. For those who choose Situation 2, the chances of being successful taking this route is lower as a high percentage of BTO flats are allocated for first-time buyers.

In other perspective, Resale Levy is a measure put in place to ensure that the subsidised flats are reserved for those who really need the subsidy.

[You can get in touch and follow Fayyadh on his FB page: Fayyadh – Real Estate ]

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