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Do You Know the 3 Models of Resale Levy?


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Resale Levy


Introduction

The main intention of the resale levy is to control the amount of subsidies that a person can get. It is designed for second timers who are buying a subsidised housing like a new flat, Executive Condominium (EC). There are 3 models of resale levy, with the current one that is the most relevant. However, the previous 2 models are not obsolete yet as there are people who sold their flat very long ago during the specified period and had not paid their resale levy, and are considering to buy another subsidised flat now.


#1 Resale Levy from 3 March 2006 Onwards

This is the current model for resale levy and it had been made much simpler as compared to the previous one.

The table below shows the resale levy payable:


resale levy from 3 march 2006

Resale Levy for First Subsidised flat sold from 3 March 2006


The amount of resale levy is fixed. There is no more compounded interest like the previous model.

Do note that the resale levy is based on the type of the first subsidised flat and not the second one.


#2 Resale Levy from 19 May 1997 to 2 March 2006

If you have sold your HDB flat as a first-timer between 19 May 1997 to 3 March 2006 and want to purchase a subsidised flat as a second timer, then this model applies to you. People who fit into this group are rare. Not many people will sell their flat so long ago and need to buy a subsidised flat all of a sudden.

This model is very complex. The table below shows the amount of resale levy to pay:


resale levy from 19 may 1997 to 3 march 2006

Resale Levy for First Subsidised flat sold Between 19 May 1997 to 2 March 2006


For the 2 room flat, the resale levy will be 10% for a household if they are upgrading to a bigger flat type. The resale levy will be 5% for a single if they are upgrading to a bigger flat type.

At that time, sellers could defer the payment of resale levy until they buy another subsidised flat. However, if you have done that, then you are probably unable to buy a subsidised flat now because you might end up paying more than the amount of subsidy that you get. Not only will the resale levy be charged based on the above table, a 5% per annum compounded interest is also charged and all of it has to be paid in cash. That sum of the resale levy, compounded interest and the subsidised flat is sufficient for you to buy a comfortable private residential property instead.

However, there is one case when the interest is waived. If the buyer and the spouse are both at least 55 years old, sold their first timer flat between 19 May 1997 and 2 March 2006, bought and right-size to a new 3-room or smaller flat from the November 2015 Sale Launch onwards, then they will only pay the percentage in the table. The amount of resale levy payable has a minimum amount too, as the prices in the past are much lower. For 2-room flat, the minimum amount is $15,000, $30,000 for 3-room flat, $40,000 for 4 room flat, $45,000 for 5 room flat and $50,000 for Executive flats.

When we say first subsidised flat, it does not only include HDB flats that are directly purchased from HDB. It also includes resale flats that received grants as well. As long as you used up your first timer opportunity, and purchased another subsidised flat directly from HDB, there will be resale levy.


#3 Resale Levy before 19 May 1997

If you have sold your HDB flat as a first timer before 19 May 1997, and want to purchase a subsidised flat as a second timer, then this model applies to you. However people who fit into this group are extremely rare. Not many people will sell their flat so long ago and suddenly need to buy a subsidised flat again now.

In the past, resale levy is very simple. The resale levy is 20% of the flat price that the buyer is going to purchase.


No Resale Levy

There is no resale levy payable if buyers are buying a new Design, Build and Sell Scheme (DBSS) flat from a developer. Leftover DBSS projects from developers are extremely rare now. It will disappear from the market soon unless the Government supports it again.

There is no resale levy payable if buyers are buying an EC from a developer where the land was launched before 9 December 2013. The Stock of ECs like that in the market is very low now, and it will run out soon.

There is also no resale levy payable if buyers are buying a resale flat, HDB studio apartment or a private residential property.


When is Resale Levy Paid

If your first subsidised flat was disposed off after taking possession of the second subsidised flat, then the resale levy is automatically deducted from the sale proceeds. Any shortfall will need to be topped up in cash. This is a case where owner buy first then sell.

If your first subsidised flat was disposed off before taking possession of the second subsidised flat, then the resale levy need to be paid in cash when taking possession of the second subsidised flat. This is a case where owners sell first then buy. In the current model, the amount is fixed and no interest is incurred.


Other key points about Resale Levy

Resale levy can only be paid in cash.

If you are a 2nd timer taking over the ownership of a subsidized flat purchased directly from HDB, you will also be liable to resale levy.

Singles only pay half the amount of resale levy when they subsequently form a family and buy a 2nd subsidized flat or take over the ownership of a 2nd subsidized flat.

Resale levy applies to all types of ownership (Joint Tenancy or Tenancy-in-Common) and share of interest in the flat. If it is a household, it is paid in full. If it is a single, then half resale levy will be paid.

If the couple is a mix of 2nd and 3rd timer, then only the 2nd timer will pay half the amount of the original resale levy value in cash. If the couple is a mix of 1st and 3rd timer, then there is no resale levy payable.


Conclusion

It is important to know if you need to pay resale levy. If you are required to pay, you need to know how much to pay. It can significantly reduce the amount of cash from your sale proceeds of the previous flat. Do find out to plan your finances and cash flow properly. If you are in doubt, always consult a professional.



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Resale Levy


Introduction

The main intention of the resale levy is to control the amount of subsidies that a person can get. It is designed for second timers who are buying a subsidised housing like a new flat, Executive Condominium (EC). There are 3 models of resale levy, with the current one that is the most relevant. However, the previous 2 models are not obsolete yet as there are people who sold their flat very long ago during the specified period and had not paid their resale levy, and are considering to buy another subsidised flat now.


Resale Levy from 3 March 2006 Onwards

This is the current model for resale levy and it had been made much simpler as compared to the previous one.

The table below shows the resale levy payable:


resale levy from 3 march 2006

Resale Levy for First Subsidised flat sold from 3 March 2006


The amount of resale levy is fixed. There is no more compounded interest like the previous model.

Do note that the resale levy is based on the type of the first subsidised flat and not the second one.


Resale Levy from 19 May 1997 to 2 March 2006

If you have sold your HDB flat as a first-timer between 19 May 1997 to 3 March 2006 and want to purchase a subsidised flat as a second timer, then this model applies to you. People who fit into this group are rare. Not many people will sell their flat so long ago and need to buy a subsidised flat all of a sudden.

This model is very complex. The table below shows the amount of resale levy to pay:


resale levy from 19 may 1997 to 3 march 2006

Resale Levy for First Subsidised flat sold Between 19 May 1997 to 2 March 2006


For the 2 room flat, the resale levy will be 10% for a household if they are upgrading to a bigger flat type. The resale levy will be 5% for a single if they are upgrading to a bigger flat type.

At that time, sellers could defer the payment of resale levy until they buy another subsidised flat. However, if you have done that, then you are probably unable to buy a subsidised flat now because you might end up paying more than the amount of subsidy that you get. Not only will the resale levy be charged based on the above table, a 5% per annum compounded interest is also charged and all of it has to be paid in cash. That sum of the resale levy, compounded interest and the subsidised flat is sufficient for you to buy a comfortable private residential property instead.

However, there is one case when the interest is waived. If the buyer and the spouse are both at least 55 years old, sold their first timer flat between 19 May 1997 and 2 March 2006, bought and right-size to a new 3-room or smaller flat from the November 2015 Sale Launch onwards, then they will only pay the percentage in the table. The amount of resale levy payable has a minimum amount too, as the prices in the past are much lower. For 2-room flat, the minimum amount is $15,000, $30,000 for 3-room flat, $40,000 for 4 room flat, $45,000 for 5 room flat and $50,000 for Executive flats.

When we say first subsidised flat, it does not only include HDB flats that are directly purchased from HDB. It also includes resale flats that received grants as well. As long as you used up your first timer opportunity, and purchased another subsidised flat directly from HDB, there will be resale levy.


Resale Levy before 19 May 1997

If you have sold your HDB flat as a first timer before 19 May 1997, and want to purchase a subsidised flat as a second timer, then this model applies to you. However people who fit into this group are extremely rare. Not many people will sell their flat so long ago and suddenly need to buy a subsidised flat again now.

In the past, resale levy is very simple. The resale levy is 20% of the flat price that the buyer is going to purchase.


No Resale Levy

There is no resale levy payable if buyers are buying a new Design, Build and Sell Scheme (DBSS) flat from a developer. Leftover DBSS projects from developers are extremely rare now. It will disappear from the market soon unless the Government supports it again.

There is no resale levy payable if buyers are buying an EC from a developer where the land was launched before 9 December 2013. The Stock of ECs like that in the market is very low now, and it will run out soon.

There is also no resale levy payable if buyers are buying a resale flat, HDB studio apartment or a private residential property.


When is Resale Levy Paid

If your first subsidised flat was disposed off after taking possession of the second subsidised flat, then the resale levy is automatically deducted from the sale proceeds. Any shortfall will need to be topped up in cash. This is a case where owner buy first then sell.

If your first subsidised flat was disposed off before taking possession of the second subsidised flat, then the resale levy need to be paid in cash when taking possession of the second subsidised flat. This is a case where owners sell first then buy. In the current model, the amount is fixed and no interest is incurred.


Other key points about Resale Levy

Resale levy can only be paid in cash.

If you are a 2nd timer taking over the ownership of a subsidized flat purchased directly from HDB, you will also be liable to resale levy.

Singles only pay half the amount of resale levy when they subsequently form a family and buy a 2nd subsidized flat or take over the ownership of a 2nd subsidized flat.

Resale levy applies to all types of ownership (Joint Tenancy or Tenancy-in-Common) and share of interest in the flat. If it is a household, it is paid in full. If it is a single, then half resale levy will be paid.

If the couple is a mix of 2nd and 3rd timer, then only the 2nd timer will pay half the amount of the original resale levy value in cash. If the couple is a mix of 1st and 3rd timer, then there is no resale levy payable.


Examples

A couple, both utilised their first timer grant when they were single, now wants to buy a new flat as a married couple. They will pay their own resale levy.

A married couple bought a flat as first timer. Now they are divorced and one of them wants to purchase a new flat. The buyer will need to pay half resale levy.

A couple, one is a first timer and another is a second timer, who wants to buy a new flat. The second timer will need to pay half resale levy.

A person, previously bought and sold a subsidised flat with the ex spouse as first timers. Now they are divorced and the person had a new spouse who is a first timer. The person, who is a second-timer will pay half resale levy.

A couple bought their first subsidized flat. One of them passed away and the remaining widow wants to buy a second subsidized new flat. The full resale levy is payable and not half levy because the remaining widow enjoyed the entire sale proceeds which is inclusive of the deceased grants (assuming it was a joint tenancy).


Conclusion

It is important to know if you need to pay resale levy. If you are required to pay, you need to know how much to pay. It can significantly reduce the amount of cash from your sale proceeds of the previous flat. Do find out to plan your finances and cash flow properly. If you are in doubt, always consult a professional.



Date first posted on 18 June 2019; Last Edited on 18 June 2019

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