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Investing in a second home? There is a very little known CPF rule which applies when you are buying a second or subsequent property. This article is intended as a guide and we have taken every reasonable effort to make sure information is correct. Information is correct as of 20 May 2014. Any comments, please write to [email protected].

For owners who have used or are using CPF for an existing property, they must set aside half of the prevailing CPF Minimum Sum before they can use the excess savings in their Ordinary Account for the second or subsequent property.

Savings in the Special Account (including the amount used for investments) and Ordinary Account can be used to meet half of the prevailing Minimum Sum.

Please note that as the CPF Minimum Sum will be raised in July each year, the amount you need to set aside will be adjusted accordingly. Use this link to check the latest CPF minimum sum: https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-scheme

The following examples show how much you may use for your second or subsequent property. The computation is based on $77,500, which is half of the prevailing Minimum Sum as of 1st July 2014.

Example 1

Purchase Price$850,000
Value of Property$800,000
Valuation Limit (lower of the purchase price of the value of the property at the time of purchase)$800,000
CPF Withdrawal Limit (100% of Valuation Limit)$800,000

You intend to use your CPF savings to pay the following for your second/subsequent property:

  1. part of the purchase price
  2. the monthly instalments of the housing loan
  3. the legal and stamp fees (say, $83,000), (Do note ABSD for 2nd and subsequent Residential property).
(A) Net Balance in Ordinary Account=$50,000
(B) Net Balance in Special Account=$10,000
(C) Amount used under CPFIS-SA=$30,000
(D) Total amount that can be used to set aside half of the Minimum Sum = (A) + (B) + (C)=$90,000
(E) Half of the Prevailing Minimum Sum=$77,500
(F) Amount in excess of Half of the Prevailing Minimum Sum = (D) - (E)=$12,500
(G) Amount that may be used for the second/subsequent property = (F) or (A) whichever is lower=$12,500

* In this case, you may only use $12,500 from your Ordinary Account after setting aside half of the prevailing Minimum Sum for the second/subsequent property. As long as you are able to set aside this required amount, you may use the future monthly CPF contributions that are paid to your CPF Ordinary Account to service the housing loan of the second/ subsequent property.

Example 2

Purchase Price$850,000
Value of Property$800,000
Valuation Limit (lower of the purchase price of the value of the property at the time of purchase)$800,000
CPF Withdrawal Limit (100% of Valuation Limit)$800,000
(A) Net Balance in Ordinary Account=$10,000
(B) Net Balance in Special Account=$10,000
(C) Amount used under CPFIS-SA=$5,000
(D) Total amount that can be used to set aside half of the Minimum Sum = (A) + (B) + (C)=$25,000
(E) Half of the Prevailing Minimum Sum=$77,500
(F) Amount in excess of Half of the Prevailing Minimum Sum = (D) - (E)=$0
(G) Amount that may be used for the second/subsequent property = (F) or (A) whichever is lower=$0

* In this case, you are unable to set aside half the prevailing Minimum Sum which is $77,500. Hence, no monies can be withdrawn from your CPF Ordinary Account for the second/subsequent property until you have set aside the required amount. Therefore, please make alternative arrangement to finance your purchase for the second/ subsequent property.

Frequently Asked Questions

Q. Can I use funds in my CPF account to buy a second HDB or private property?

A. Yes, so long as you meet the conditions with regard to minimum sum in your CPF account. The total funds in your Ordinary Account (OA) and Special Account (SA) must exceed S$77,500 (or half of the prevailing minimum sum) before the excess can be used to pay for a second property.

Any funds in the SA used under the CPF Investment Scheme (CPFIS) will be counted towards meeting the Minimum Sum. The principle value (and not market value) of CPFIS-SA funds is used in the calculation.

For example, if you have $10,000 in your OA, $30,000 in your SA and $40,000 invested in CPFIS-SA, making a total of $80,000, you can only use $2,500 ($80,000 minus $77,500) towards paying for your second property.

The amount withdrawn cannot be greater than the amount in the OA.

Q. Can OA funds withdrawn for investments under CPFIS count towards the Minimum Sum? Do Medisave Account funds count towards the Minimum Sum? What if I intend to sell my first property soon after buying my second property?

A. If you plan to sell the first property, you are allowed to withdraw all in OA to buy the second property and you will be given a grace period of 6 months to sell the first property.

Q. What if I am buying a third property?

A. The above rules still apply.

Note: You should always refer to the CPF Board http://www.cpf.gov.sg/for most up-to-date answers.