Buying Selling Property Property

Should I Sell My HDB After Upgrading To Condo?

Should I Sell My HDB While I Am Upgrade To Condo?

As time moves on, you have built your financials to be able to upgrade from your existing HDB. There are some questions that you would be asking yourself, such as; Should I upgrade? What should I upgrade to? Where would be a good location?

These questions can be answered easily as it is very much how you feel. You would be able to address those queries, as long as you are comfortable both with financially and with the location. However, the question that sits between the current and future financial is, should I sell my HDB after upgrading?

There are few things that you should take into consideration, before making that decision that I will be sharing with you.

How Much Interest Would I be Paying

As this is your first HDB Flat, you would have taken up a HDB loan. You will also have received a grant from CPF Housing grant. You are using your CPF to repay your loan.

Buying Selling upgrading from HDB to private condo.

Assuming that you bought a 4 Room HDB flat in Bukit Merah in 2010 at $500,000. You would have taken a loan of $350,000. As of today, you have serviced your $350,000 loan for 10 years. The interest rate you paid is at 2.6%. How much of your accrued interest has been paid?

Buying Selling upgrading from HDB to private condo.
Data obtain from iras.gov.sg

From the chart above, you have paid a Cumulative accrued interest of $82,363.75. If your flat is sold now at the current market value (Q1 2020) of $652,000, $432,363.75 would be credited back to your CPF, and your potential cash proceed would be $219,636.25.

Should you decide to hold your property. Your total accused interest paid would be $183,429.95 upon completion of the 35 year loan. In addition to your principle of $350,000. The total amount returning to CPF at the end of 35 years will be $533,429.95. About $100,000 more than what it is today.

To achieve the $219,636.25 of cash proceeds. Your flat needs to be sold at $753,000 25 years later at $753,000. However, this figure may not be possible at that time due to the following reasons stated below.

Tax Payable When Buying Your Condominium

As you have decided to rent your HDB instead of selling it. You would be required to pay Additional Buyer Stamps Duty (ABSD) on the condominium that you have purchased, and should you be a Singapore Citizen, you would be required to pay 12% of your Condominium purchase price.

Looking at a property that is a unit with 3 bedrooms at Queens Peak, which is going at $1,800,000, the ABSD of 12% would be a cash payout of $216,000. This amount would almost be equivalent to the cash proceeds from previously selling your 4 room flat.

Total Loan Amount

To be entitled to a loan for your newly purchased Condo, you would have to

Buying Selling upgrading from HDB to private condo.

Total Debt Service Ratio(TDSR)

The Total Debt Service Ratio is a framework by the Monetary Authority of Singapore(MAS), which aims to safeguard the borrower, whom in this case is the property owner, from over-borrowing.

This is computed based on the percentage of the monthly gross income of the purchaser, to ensure the ability of repayment

Loan To Value(LTV)

If your current HDB has a loan that is still running, you would be limited by the Loan To Value(LTV), hence, your total loan amount would be 45% of the total property value. In addition, you will be required to have cash on hand for 25% of the property value as down payment.

Should you decide to buy-up your current HDB Loan, it will be your second property, and hence your LTV would be capped at 75% of the property value, and the cash on hand required for down payment would be 5% of the property value.

Putting Your HDB For Rental

You would want to put your HDB flat to good use after having to hold back the selling of your flat. Majority of the people would put the unit out for rental, as with that, you would become a property investor, collecting rental as a form of passive income.

Sound good? Yes. But, have you missed out anything?

Answer is : YES!

Before you collect the key to your new condominium, you will be required to pay the ABSD in CASH within 14 Days after the agreement of the purchase has been signed.

Upon receiving the keys to your new Condominium. Before you are able to rent out your flat. You would have to refurnish the flat, ensuring that all necessities are in a working and presentable condition. Along with fulfilling the requests of the tenant for necessities such as beds, a television, and a washing machine, just to name a few. Depending on the condition of your flat. The amount required for refurnishing might cost you up to a few thousand dollars, even before the flat has been rented out.

Upon successful rental of your flat, the amount of rental collected would be taxable at the end of the year. This amount would be on top of your regular taxable income. In addition to the tax payable, you would be required to pay a property tax, which is 10% of the Annual value of your flat.

Should the flat be rented out at a rental value of $2500 with a lease of 2 years, the total rental collected would be $60,000. With your loan repayment for your HDB flat that is estimated at $15,000 per year, in addition to the tax payable and repair works required, your profit per lease term of 24 months, potentially comes to $25,000.

Pricing Of The Older HDB Flat

The value of property depreciates with time. A HDB flat with a value of $652,000 now, would not remain the same in 10 years.

With reference to a point above, you would be fetching a potential cash proceed of $219,636.25 should you decide to sell your property now. With reference to the supporting chart shown below, the average transaction price of a 4 room HDB flat in Bukit Merah is $687,000, with the price increasing from 2007 to 2013, before stagnating after Q2 of 2013. This is due to the age of the flat.

Buying Selling upgrading from HDB to private condo.
Data Obtained from data.gov.sg

Therefore, wanting to make $219,636.25 after having fully paid your loan 25 years later could pose as a challenge, as the price that you would have to sell your flat at would be $753,066.20

Expected Cash proceed : 219,636.25,
Principle Load amount : 350,000
CPF accrued Interest : 183,429.95

Buying Selling upgrading from HDB to private condo.

The rental amount of $312,500 collected over 25 years, with the assumption that the rental fee remains at $2500 per month, was not taken into consideration, as it has been used to offset the amount paid for ABSD

Below Is A Case Study For Your Reference:

Mr and Mrs Lim contacted me sometime back. They had some thought of upgrading from the existing HDB to a Condominium near Sengkang.

From the meeting with them, Mr. Lim gave me the understanding that they were staying in a 5 room flat in Sengkang. The flat has passed the MOP and they are planning to upgrade to a Condominium.

Without drilling into much detail, my initial recommendation to them was, not to hold the HDB flat. The purchase of second property will require them to pay for ABSD. The ABSD amount is going to be of an impact to them. Mr. and Mrs. Lim have also shared, that was the concern they had and wanted a second opinion from a professional realtor.

Moving on, I have also shared with them, the accrued interest from the CPF, which they were not aware of. I have therefore, done the computation as followed for them.

Purchase Price of Flat : 488,888
Loan Amount : 380,000
Outstanding Loan: 336,000
CPF Accrued Interest : 56,000

Expected Selling Price : 540,000
Potential Cash proceed : 100,000

I have also shared that should they want to keep the HDB, the ABSD for the new property priced at $1,500,000, would be $180,000. The potential cash proceed would not be able to cover that should they not sell the HDB flat

With that, Mr and Mrs Lim has taken my recommendation. They have put the HDB on market for sales, at the same time looking for the new condo. I have also shared on the timeline required for both buying and selling. So that they are able to move into the new place and same time, without incurring additional costs

Conclusion

Having shared the various figured on the holding on to a HDB flat and buying a Condominium. My recommendation would be, for them to sell their current HDB flat once it has reached the MOP or when you decide to upgrade. Holding a second property with the first being a HDB comes with a higher additional payable tax. Furthermore, there is no capital gain tax upon selling your HDB.

However, with that said, there are still options available should you want to become a property investor. You can still invested in two properties, without incurring high payable tax can be overcome. This can be done, as long as the properties you owned do not involve a HDB.

Buy Sell Renting of your property

Lewis became part of the family of Orange Tee and Tie in 2020. He has been in the real estate since 2005. Together with him, he brought along a long history of experience in both HDB and Private property.

His personal belief is, to share the truth and facts with everyone. With that, he has good credibility with all his client

As the world is moving into digital, there are still some “human touch” that must not be missed. Now, let’s ring me at +65 90107188 if you have any queries relating to real estate. I do understand you might be busy. Tap onto the following to WhatsApp me and i will respond to you

Lewis+65 9010 7188Buy Sell Rent. Connect to me NOW

Buying Selling Property Property

What can you do, when your HDB reached 5…

What Are The Available Options When Your HDB Reached MOP?

(Agent) Lewis: Mr. and Mrs. Soh, Thank you for your time. I understood, your current flat has reached the HDB MOP period. Any plan you have in mind?
(Owner) Mr. Soh : No Plan.. Why I need to plan? can’t i continue staying?
(Agent) Lewis : Oh, of cos you can continue to stay, until your flat reach 99 years of age.
(Owner) Mr. Soh : Den, why I need to plan? i just continue to stay lor!
(Agent) Lewis : Mr. Soh, yes, you can. But, do you know, what will the value of your HDB flat be if you stay till you retired?
(Owner) Mr. Soh: Though it will surely go up?
(Agent) Lewis : May or may no!
(Owner) Mr. Soh : you sure?
(Agent) Lewis : Yes. Why not let me share with you, what are your option available. After that, you decided what you want to do? Maybe you can retired earlier. I said, MAYBE
(Owner) Mr. Soh: Ok.

HDB reached 5 Years MOP

3 Common options available for owner

Option 1 – Continue to stay in current HDB Flat

To save all effort of selling, buying, renovating and moving. you can continue to stay in your current flat.

Before you make that decision, some of the key pointer for your consideration

Understand the value of your current flat?

In most HDB Flat, the price is at peak within the first three years, after MOP. Reason being, the flat is still new, renovation is still in good condition where buyer don’t have to do much.

With that, some buyer don’t mind paying a bit more, for the condition and renovation. They can capitalised the use of their CPF to service the loan and not cash for renovation.

Although the age and renovation has impact to the value of the flat. These are not the only factor, there are other factor to be considered as every single unit of flat is unique. Not all flat will be within that category. Which can profit upon selling.

Option 2 – Buying a private property and consider renting the current HDB flat

This option is to buy a second property. Use property to generate income through rental. The rental collected can be used to service the loan of the property

The consideration for this option is. As it is a second property, you will be required to pay for ABSD (Additional Buyer’s Stamp Duty) during the purchase.

As you are still have a loan running for your HDB flat, the loan for your private property will be cap at 45% LTV (loan-to-value).

In many circumstances, this is the drawback for this option unless you are financially sound to pay those

Option 3 – Upgrade from the current property

In this option, you can further consider one for the four sub-option.

Buy First Sell later

Although you are buying the property first and sell it late, you will still need to pay Additional Buyer’s Stamp Duty (ABSD) to IRAS during the purchase and seek remission of the amount after selling your HDB flat.

The timeframe for that to happen is six months. Which means, the HDB flat need to be sold within six months from

– The date of purchased on the second property for completed property
– The date of issuing of the TOP (Temporary Occupation Permit) or CSC (Certificate of Statutory Completion), whichever is earlier for new / uncompleted property
to enjoy this remission.

Some other requirement will be, the couple will need to have at lease one Singapore Citizen in the purchase and the newly purchase unit has to be on both name of the couple only.

Lastly, at the time of selling the current flat, the couple must be remains married and there is no changes to the ownership of the second residential property.

Sell Now and Buy later

This is one of the most neat option. Reason, you do not need to rush to do any of the transaction be if buying or selling. You can have time to buy the unit you wanted to, be it new or resales.

The catch for this is, you will sell your current unit openly in the market. After which, rent a unit as temporary accommodation (be it 1 or 2 years lease depending on your buying)

During the staying in the rented flat, you will wait for the handing over of key for your purchase unit, do any renovation required and move in on the selected date.

NO RUSH

Question you might ask will be, why should I be paying rental during this period?

Agreed, but the rented pay as compared to your ABSD. The different is very clear. Example, the ABSD for 2 million dollars property S$ 364,600. the rental for any units over 24 months, you can put aside $72,000 and you will still have a saving of close to S$ 300,000.

Buying and Selling concurrently

This option, you can bypass the above payment of ABSD totally. Yes, you can. But… But.. But..

The key factor to made this a success is, timeline need to be well plan and managed for both buying and selling of both the properties. You are also, need to take into consideration that you do not have time for renovation.

For this option, I will strongly suggest you to engage an experience and professional real estate relator to assist you. He / She must be able to put on table, a timeline plan on how you can go about doing the upgrade. This is to reduce any foreseeable hiccup

If you felt that, you are not confident in the realtor engaged. You can consider us, as you have 3 professional realtor at the same commission paid.

Selling your current and buying two properties, one to stay and one for investment

If financially permit. You can consider using both your cash from sales proceed and CPF Fund of the sold HDB flat to purchase 2 private properties.

one of the private property for your own staying and the other put in market for rental. The rental collected can be used to support the loan of one of the property with some surplus.

To reduce any possible stress from you, being the buyer of both properties. We can arrange to have both the properties purchased at different timing. This is not necessary to happen at the same time.

Conclusion

With the above options shared. it might sound too heavy for you. All option are workable, but it depends on the financial and risk appetite. I am most happen to assist to walk you through, at your available time slot, to see which option fit you best.

Case Study 1

Let me share with you, what I have done for one of my client, Mr and Mrs. Liew

Mr and Mrs. Liew purchased their HDB 4 room flat in Serangoon. A resales HDB flat. They have, during the purchase enjoyed the CPF Housing grant. They are not willing to move out of Serangoon area as their parent are staying in Serangoon also.

I was being contacted shortly after their MOP reached. Sharing with me, they have plan to upgrade. After understanding their financial and risk appetite and their interest in buying one private property and second for investment.

I have recommended them to sell their HDB flat and purchase a 3 bedroom in Forest Woods Condo. During the time, after selling the HDB flat, before obtaining the key for new condo (which is soon). They have the benefit of staying with their parent over the past 4 months.

Now, they are just happily staying with no worries, waiting for the taking over of their private condo. After which, they will be looking into investing a 2 bedroom units for rental.

Buy Sell Renting of your property

Lewis became part of the family of Orange Tee and Tie in 2020. He has been in the real estate since 2005, with him joining, he has brought along with him, was a long history of experience in both HDB and Private property.

His personal belief is, to share the truth and facts with everyone. With that, he has good credibility with all his client

As the world is moving into digital, there are still some “human touch” that must not be missed. Now, let’s ring me at +65 90107188 if you have any queries relating to real estate. I do understand you might be busy. Tap onto the following to WhatsApp me and i will respond to you

Lewis+65 9010 7188Buy Sell Rent.  Connect to me NOW
Buying Selling Renting HDB Property

4 Questions To Ask Before Upgrading Your HDB

4 Questions To Ask Before Upgrading Your HDB

You have been staying in your newly HDB for years and it has reached the MOP. Your friend around you will now tell you, sell your current HDB and upgrade to a private condo.

Comment from friends might very much into a direction, private condo, your value better if you want to sell in the future. All facility is just downstairs, you have full ownership and more

After talking to many people around you, all will be giving, somehow kind of similar feedback and you decided to upgrade. Now, what are the magic question you will ask, yourself, or the realtor before you make that moves?

MUST I SELL MY HDB BEFORE I CAN UPGRADE

The answer to that is NO if you are a Singapore Citizens. you do not have to sell your current HDB flat before you can buy a condo in Singapore. Although you are given the option to own more than 1 properties, after buying the private condo. there is a financial impact which you will like to consider.

Upgrading Your HDB

To own a second property in Singapore, there is an Additional Buyer Stamps Duty (ABSD) to be payable. Depending on the number of properties the HDB owner owns, the percentage of ABSD varies from 12% to 15% depending on the number of properties the owner owns

HOW MUCH I MAKE IF I SELL MY HDB

Depending on your financial situation and also, your risk appetite, you might consider selling the HDB and upgrade to the private condo.

Once you have made that decision, the computation of HOW MUCH goes into your pocket I make upon selling my HDB, and can I afford to buy private Condo?

Time to Sell your property. Contact me now at +6590107188

You realized, SingPass is very important now. Why, first, you will need to know, how much outstanding loan you have, if you are taking HDB loan. if you are taking a bank loan, you will need to check with the bank providing you the loan.

How do I check my outstanding loan, if I am taking an HDB loan? you will have to log in to the HDB web portal, i.e., www.hdb.gov.sg. After successful login, go to My HDBPage and obtain the outstanding amount indicated.

After knowing how much outstanding, you will now, find out how much you need to return to CPF, which you are using it to service your earlier loan. in the event you are using CASH to services you loan, this will not be required.

To obtain the total CPF amount used, including accrued interest. Log in to the CPF web site using your SingPass. Upon successful login, go to “My Statement”. Select “My Public or Private Housing Withdrawal Details”, which will provide you detail on the amount payable after selling your property

After summing the above 2 figures, you have computed the biggest ticket amount. with that, you can, therefore, make a quick decision, will your HDB, selling at the current market situation . will it be profitable for you. In a simple team, do you get back any money?

What are the taxes payable upon buying

In a purchase of Property, there are various tax payable. Inboard category, there are the following tax payable

Buyer Stamps Duty

Buyer stamp duty is tax duty payable, regardless of the number of the property you have prior to the purchase of the property. This payment is required once you have executed the sales and purchase agreement

If the benefit is stated in the document to be stamped and is a cash discount (i.e. cash, non-post dated cashier’s order or cheque) to be given to the purchaser upon execution of the document (and not later).

Worry about your BSD (Buyer Stamp Duty).  Contact me now at +6590107188
BSD Computation

To know what is the total amount that is a consideration for stamp duty. The total discounted amount may be deducted from the purchase price.  The final agreed price will still reflective of the current value.

If the document to be stamped stated a non-cash benefit to be given (e.g. furniture voucher, rental guarantee, car, or lucky draw), the value of the benefit is not deductible from the purchase price for stamp duty purpose.  

If the cash or non- cash benefit is not stated in the document to be stamped, the value of the benefit is also not deductible from the purchase price for stamp duty purposes.

Additional Buyer Stamp Duty

The ABSD liability will depend on the profile of the buyer as at the date of purchase or acquisition of the residential property:
A.  Is The buyer is an entity or an individual
B.  The Buyer’s residency status
C.  The numbers of residential properties owned by the buyer(s)

WHETHER THE BUYER IS AN INDIVIDUAL OR AN ENTITY

An entity means a person who is not an individual. It includes the following:

  • An unincorporated association
  • A trustee for a collective investment scheme when acting in that capacity
  • A trustee-manager for a business trust when acting in that capacity
  • The partners of the partnership whether or not any of them is an individual, where the property conveyed, transferred or assigned is to be held as partnership property

If a property is jointly purchased by buyers of different profiles, the profile with the highest ABSD rate will apply to the entire value purchased.

Thinking of the ABSD (Additional Buyer Stamps Duty) Contact me now at +6590107188

THE RESIDENCY STATUS OF THE BUYER

The applicable ABSD rate is based on the nationality of the buyer on the date of purchase. You must have been granted the residency status by the Immigration and Checkpoint Authority (ICA) as at the date of purchase in order to enjoy lower ABSD liability. The date of the issue reflected in the IC collection slip would be taken as when the residency status was granted.

THE COUNT OF RESIDENTIAL PROPERTIES OWNED BY THE BUYER

If a Contract or an Agreement to purchase the property has been signed, that property is to be included in the count of properties owned by a buyer from the date of acceptance of the agreement, even if it has not been legally transferred to him as he already has an equitable interest in the property.

This also includes the purchase of an uncompleted unit from the developer if the Sale & Purchase Agreement has been signed.

Similarly, the property is to be excluded from the count of properties owned by a buyer. If there is already a Contract or an Agreement to sell his property and the new buyer has executed his option to buy the property.

Should I use the same realtor for buying and selling

There is technically no right or wrong answer to use the same realtor in both your buying and selling of properties. In fact, there will be more benefits in using a single agent for both your buying and selling of your property.

TIME

The same realtor will be able to coordinate the timing of both buying and selling, that minimize running into the risk of “homeless” or “overpay”. This risk might potentially happen when using 2 realtors.

COST

Other than time-saving, as share earlier. the cost-impact will come in when the handing over of your sales units is earlier than your collection of the property bought.

This potentially leads to, an arrangement of short team stay is required, be-it, hotel stay, short term rental, etc…

NO DUAL REPRESENTATION

Dual representation in the context of real estate is, the same realtor is representing you, and the other customer on the SAME property.

In the case of representing the SAME customer on a different property, it will not be classified as due representation, rather trust in a seamless transaction of both buying and selling.

Is that what I need to know?

Sadly, there are more information and procedure required in both the buying and selling of your flat. By reading will give you many theory concepts, but when it comes to actual execution. There are always surprises that rises

To ensure a smooth and seamless transaction. Most importantly, a stress-free buyer and seller. Let the professional do the job.

Ring ME now @ +65 90107188 to have a sharing session on your expectations.

Alternatively, you can also SMS or WhatsApp me