What happens to your CPF grant monies when you sell your house?

As Singaporeans, we are all appreciative of the substantial grants we receive when we buy an HDB flat.

However, some of us might ponder a little more about the three-letter acronym of "CPF" in the name of the grant - "Enhanced CPF Housing Grant" (EHG) - and what implications that might have when it comes time to sell our flat.

ABOUT THE ENHANCED CPF HOUSING GRANT (AND ITS COUSINS) 

When we think of housing grants, we typically think of the Enhanced CPF Housing Grant (EHG) and its predecessors it replaced, namely the Special Housing Grant and Additional Housing Grant.

In fact, there is an entire family of CPF housing grants alongside the EHG. These include grants for resale flat buyers like the Family Grant and Proximity Housing Grant, as well as grants for second-timer applicants like the Step-Up CPF Housing Grants (for second-timers), Half-Housing Grant (for Singaporeans whose spouse previously received a grant), and Top-Up Grant (for those who previously received the Singles Grant and now qualify for Family Grant).

All of these grants are disbursed by HDB, into the CPF Ordinary Accounts of eligible homebuyers, in order to offset the purchase price of the flat, including the portion of downpayment payable with CPF monies.

WHAT HAPPENS TO THE GRANT MONEY WHEN YOU SELL YOUR HDB FLAT? 

When you sell your flat, you first need to account for fees and costs relating to the sale, such as levies, legal costs, and stamp duties. After that, you will need to settle any outstanding mortgage you may have.

Next, you'll need to return any CPF monies used to pay for the flat - either downpayment or monthly repayments - plus accrued interest.

If the proceeds from the sale of your flat do not cover the amount of CPF used plus accrued interest, the cash deposit you collected from the buyer will be used. If that is still insufficient, you do not need to top-up the shortfall with cash, provided your flat was sold at market value.

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After returning CPF monies used with accrued interest, you will then be able to receive the balance (if any) in cash.

This means that when you sell your flat, the CPF grant monies you received will be returned to your own CPF Ordinary Account plus accrued interest, which you can then use for your next flat purchase, for investment purposes, or your retirement. In other words, the grant money is not returned to HDB or the government.

The only caveat to this is that if you received a housing grant of more than $30,000, part of the housing grant you refund to your CPF account will be credited to your Special Account/Retirement Account and Medisave Account.

HOW MUCH DO YOU NEED TO RETURN TO YOUR CPF ACCOUNT UPON FLAT SALE? 

To check how much CPF you need to return to your CPF Ordinary Account - and Special Account/Retirement Account and Medisave Account, if applicable - you can log in to the CPF website with your SingPass and click on My Statement > Section C: Property > My Public or Private Housing Withdrawal Details.

Those who are aged 55 and above, you will need to check with the CPF Board directly on the refund amount.

GRANTS > SUBSIDY

The structure of CPF housing grants gives Singaporeans flexibility since the money is refunded into their CPF accounts and can be used for their next flat purchase, kept for retirement, or used for other purposes.

On the other hand, a direct subsidy/discount off the selling price of HDB means that you would only benefit whenever you buy a flat.

This article was first published in Dollars and Sense.