Summary

HDB flat owners in Singapore can buy private residential property only after their flat's minimum occupation period (MOP): five years for standard flats and 10 years for Plus and Prime flats, according to the Housing & Development Board (HDB). After that, the order in which they sign decides whether Additional Buyer's Stamp Duty (ABSD) is due.

A Singapore Citizen who owns no other home pays no ABSD on a private condo if the option to purchase for the sale of their HDB flat is executed first, the Inland Revenue Authority of Singapore (IRAS) says. If the private home is bought first, a married couple of citizens pays 20% ABSD on it and gets the money back only if the flat is sold within six months, under IRAS's remission rules.

What this means for Singapore HDB upgraders

First, the MOP

HDB counts the MOP from the day you take possession of the flat to the earlier of the date you exercise the option or sign the sale and purchase agreement for the private home, even if it is still being built. Periods when the whole flat is rented out, or when the lease is breached, are left out of the count. Until the MOP ends, you cannot own private property, including holding it on trust or being a beneficiary, HDB says.

After the MOP, a household with at least one Singapore Citizen owner may keep the flat when it buys private property. If every owner is a permanent resident, they must tell HDB before exercising an option on a private home in Singapore and sell the flat within six months of acquiring it.

Route one: sell the flat first

HDB requires sellers' Intent to Sell to be valid for at least seven days before they grant an option to purchase. For stamp duty, IRAS treats a property as sold when the option or sale agreement is executed, even if the sale has yet to complete.

The difficulty is the gap. If you have committed to buy a completed property in Singapore, HDB may let you stay in the flat for up to three months after the resale completes, if your buyer agrees. There is no further extension. When the sale completes, the CPF savings you used, with interest, go back to your CPF Ordinary Account, HDB says.

Route two: buy first, then claim the ABSD back

Since 27 Apr 2023, ABSD has been 20% on a citizen's second home and 30% from the third; permanent residents pay 5%, 30% and 35%, according to the Ministry of Finance (MOF) and IRAS. Stamp duty is due within 14 days of signing, and late payment can draw a penalty of up to four times the duty, IRAS says.

IRAS remits the ABSD for a married couple only if all of its conditions are met:

  • at least one spouse is a Singapore Citizen, and the second home is bought in both names only
  • neither spouse owned more than one residential property when it was bought
  • the first home is sold within six months of the purchase date for a completed property, or within six months of the earlier of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) for one still being built
  • the couple stays married, the second home's ownership is unchanged when the first is sold, and they buy no other residential property in between.

IRAS says it will not extend the six-month deadline because of market conditions or personal circumstances. For purchases filed on or after 2 Jul 2023, the ABSD is refunded automatically within six weeks of the sale of the first home being stamped.

The loan

The Monetary Authority of Singapore (MAS) sets loan-to-value (LTV) limits by the number of housing loans a borrower already has. With none outstanding, a bank can lend up to 75% of the price, with at least 5% paid in cash. With one, the limit is 45%, with at least 25% in cash. The two limits fall to 55% and 25% respectively if a loan for private property runs longer than 30 years or past the borrower's 65th birthday.

Repayments on all debts are capped at 55% of gross monthly income under the total debt servicing ratio (TDSR), and banks must test residential loans at an interest rate of at least 4%, MAS says. For upgraders, MAS lets banks leave out the repayments on the HDB flat if the borrower has signed an undertaking to HDB to sell it within the stated period and declared that they will, holds HDB's letter approving the sale, or has fully repaid that loan.

Illustration: a S$1.8 million resale condo

Illustration only. ProprKey calculation for a married couple of Singapore Citizens who have met the MOP, own only their HDB flat and take a 25-year bank loan that ends before age 65.

  • Buyer's Stamp Duty (BSD) is S$59,600 on either route, under MOF's rates for purchases from 15 Feb 2023, which rise from 1% on the first S$180,000 to 5% on the portion above S$1.5 million.
  • Selling first: no ABSD, provided the buyer of the flat has exercised the option before the couple buys.
  • Buying first: S$360,000 in ABSD is due within 14 days and refunded if the flat is sold within six months of the purchase date.
  • With no housing loan outstanding, the bank can lend up to S$1.35 million, and at least S$90,000 must be paid in cash. With one, the cap is S$810,000, and at least S$450,000 must be cash.

Education only — not tax, legal or investment advice. Confirm with a licensed professional.

What to do next

  • Confirm your MOP end date with HDB before you start viewing private homes.
  • Ask your bank for an in-principle approval, and ask how it will count the loan on your flat if that loan is still outstanding when you borrow.
  • If you buy first, put the remission deadline in your diary and list the flat early enough for its option to be exercised well before it.
  • If you sell first and have committed to a completed property, agree any temporary stay of up to three months with your buyer.
  • Compare private homes for sale, and new launches, where the six months run from TOP or CSC: https://proprkey.com/en/properties?segment=buyer&mode=buy and https://proprkey.com/en/new-developments
  • Ask a verified mortgage adviser or conveyancing lawyer to check your timeline: https://proprkey.com/en/pros?segment=legalFinance