facebookI have been using CPF to service my HDB loan. I have also contributed to my CPF SA to get tax relief. I was thinking what is a wiser way..? - Seedly

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          Curiousful

          Level 4

          22 Oct 2020

          CPF

          I have been using CPF to service my HDB loan. I have also contributed to my CPF SA to get tax relief. I was thinking what is a wiser way..?

          1. Do a housing refund first, then transfer the money from OA to SA.
          2. Do a cash top up to SA. What are my considerations?

          3

              Discussion (3)

              What are your thoughts?

              Jiayee

              Jiayee

              22 Oct 2020

              Level 11·Salaryman at some company

              (1) doesn't give you any tax relief but it prevents the CPF "debt" (a debt to yourself isn't really a debt but...) from accruing interest. This helps if you want to extract liquid cash when you sell your home. I am not very sure why people need liquid cash e.g. to pay the cash downpayment for an upgraded home?

              (2) RSTU offers tax relief. The limit is $7,000 for yourself and another $7,000 for across your family. Top-ups are "reserved" and should never be able to see the light of day unless in the form of CPF LIFE annuities.

              (3) There's an option 3. SRS. The tax relief cap per year $15,300 for citizens. But it'd be best to have an idea on what you plan to do with the monies that enter the SRS account (i.e. invest) as the SRS account earns interest just like any other bank account at 0.05%. There are more terms and conditions surrounding it e.g. withdrawal penalties before statutory retirement age etc. You will need to examine it in greater detail.

              Also, it's also good to assess if the tax relief savings is "worth it". If you are in a lower income tax bracket or need cash flow, you may not want to put your cash in these illiquid accounts so quickly.

              Cheers.

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                  Terence Tan

                  Terence Tan

                  22 Oct 2020

                  Level 5·Financial Services Consultant at Manulife Financial Advisors

                  Hi,

                  would just like to clarify what do you mean by wiser sense. wiser sense in terms of getting tax relief? or wiser sense in terms or minimizing how much u have to pay for your HDB loan

                  cheers

                  Terence

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