Part 02: Restriction on CPF OA Usage for Property Purchase in Singapore

In my previous article, I’ve discussed about the Valuation limit and Withdrawal Limit of CPF OA (ordinary account). Read it here if you want to know more.

If you intend to use CPF Ordinary Account (OA) monies to pay for you property purchase, do note that there will be some restrictions on the use of CPF OA.

Here I will share some of the circumstances where these restrictions apply:

1. Buying a property with remaining lease of less than 60 years but at least 30 years

You can use your CPF for the property provided that your age plus the remaining lease of the property is at least 80 years.

For example, if you are 35 years old and the property you intend to buy has a remaining lease of 40 years.

35 + 40 = 75

In this case you will not be eligible to use your CPF for the purchase. Therefore do check out the lease balance left in the property before making any purchase.

In addition, the maximum amount of CPF that you can use for such a property purchase is a percentage of the lower of the purchase price or the value of the property at the time of purchase. The formula for the calculation will be as follows:

Before purchasing your next property, do take note of how the balance lease will affect you when you decide to sell it later on.

2. Buying a property with remaining lease of less than 30 years

You will not be allowed to use your CPF savings to buy a property with remaining lease of less than 30 years.

Source: CPF board

3. Purchase of Second Property

You can use your CPF savings, up to the Valuation Limit, for your second or subsequent property with a remaining lease of at least 60 years after meeting certain conditions based on your age. However you will have to set aside the Basic Retirement Sum (BRS) before you can use your excess Ordinary Account savings for the purchase.

If you are not very sure of your current situation, do seek an advisor to help you out.

4 ways you can use your CPF to pay for your private property purchase

Source: CPF board

You can use CPF OA for the payment of stamp duty when you purchase your property. The stamp duty is payable within 14 days from the date of the sale and purchase agreement or the date of acceptance of the option to purchase.

However do note that for private property purchase, you may need to use cash to pay for the stamp duty first. Subsequently, you can apply for the reimbursement from your CPF account. While CPF OA monies can be used to pay the stamp duty when purchasing the property, the monthly service and conservancy charges, and other charges related to the use of the property, including taxes, cannot be paid using CPF savings.

Seller’s Stamp Duty

Do note that your CPF savings cannot be used towards the payment of your seller’s stamp duty. The seller’s stamp duty has to be paid with cash.

You can read my first article of the CPF series here, where I discussed if we should use CPF for property purchase.

In the next article, I am going to share with you what is CPF accrued interest and how it will affect the profit that you will make from selling your property.