facebookWhat is your thoughts on selling off first-timer 4-room BTO (in a not so good location) and purchase a second-timer 4-room BTO (in a better location)? - Seedly
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Anonymous

05 Mar 2021

What is your thoughts on selling off first-timer 4-room BTO (in a not so good location) and purchase a second-timer 4-room BTO (in a better location)?

I note that there is a $40k levy involved?

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    What are your thoughts?

    Kenneth Fong

    Kenneth Fong

    05 Mar 2021

    Level 10ยทMarketing Manager at Seedly

    Hi anon,

    Let's address your question in parts.

    Is there a $40k levy involved when I sell my first-timer 4-room BTO and buy another 4-room BTO (second-timer)?

    Unfortunately, yes.

    The resale levy is meant to ensure a fair allocation of public housing subsidies. So if it's your second time buying a subsidised flat, you'll need to pay an HDB resale levy.

    Since you're selling your first subsidised flat after 3 March 2006 (that's when HDB changed it to a fixed resale levy amount), you're correct that you'd have to fork out $40,000 for your second subsidised 4-room HDB BTO flat.

    Source: HDB

    If you disposed of your current BTO AFTER taking possession of your new subsidised flat, the HDB resale levy will be deducted from the sale proceeds and any shortfall will have to be paid for in cash.

    If you disposed of your current BTO BEFORE taking possession of your new subsidised flat, the HDB resale levy must be paid for in cash upon taking possession of your new subsidised flat.

    So... Should I sell my first-timer BTO (not so good location) and purchase a BTO (better location)?

    It depends, really.

    Note: I'm gonna assume that you're past the Minimum Occupation Period (MOP) of 5 years for your current HDB BTO 4-room flat. If not, then you're gonna have to wait a bit.

    Since you want to move to a better location... getting another BTO means you might need to wait for a bit. This will vary because it really depends on which stage of completion your new BTO is at.

    If it's a new project that was only launched this year, you're looking at wait-time of between 5 to 6 years,** thanks to COVID-19 which has slowed down global supply chains and the availability of migrant workers here in Singapore. Of course, there are BTOs that are midway through construction, close to TOP, or are already available, and you can buy them through say... the Open Booking of Flat exercise. But with those types of flats, your choices are limited** to whatever is available at that point of your application.

    ALTERNATIVELY...

    You can also consider an HDB resale flat. Besides getting more options in the market. You can pretty much move anywhere on the island โ€” as long as there're flats available for sale. And you also do not need to pay the resale levy either. Double win.

    With resale flats, they may not necessarily be more expensive because you might qualify for certain CPF housing grants (IF you're eligible). Yep, it never hurts to check with HDB.

    So... if I were you. Here's what I would do, step by step:

    1. Find out how much I have to settle if I sell my current HDB BTO (assuming you took a CPF housing grant, you'll need to know how much you need to pay back with interest)

    2. Decide what my timeline is like and whether I want to consider a resale flat or not, even if I don't want to consider a resale flat I'll still want to get a price gauge for agar-ation in my next step

    3. If I die die must get a second subsidised HDB BTO flat, I'll need to factor in the levy and cost to see how much it'll cost me as compared to me going with a resale flat in the same area

    P.S. you'll notice that a lot of my decisions have to do with the cost I would incur. And that's because I don't wish to lock up too much of my wealth in the form of assets (asset-rich) and don't have sufficient cash or liquidity on hand to grow my wealth (cash-poor) instead.

    OR if you _really _wanna simplify things...

    1. Look for an HDB resale flat sua. Don't need to pay any levy. Plus confirm better location since you can physically go and visit the site, check out the amenities nearby, see if it's near your favourite bubble tea shops and etc.

    If you need a guide on how to choose the perfect HDB resale flat, you can use this checklist which, we created!

    โ€‹โ€‹โ€‹

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      Zac

      Zac

      27 Feb 2021

      Level 12ยทNoob at Idiots Invest

      Yes, you'll need to pay a resale levy. You can read about it here and here.

      Essentially, HDB imposes a resale levy to prevent people from making a profit off selling your first subsidised home, before buying another subsidised home.

      Location can be a serious gamechanger. If the location is really important to you, and you can afford it, I don't see why not.

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