Martin Lee @ Sg
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Property Sale and CPF Minimum Sum

Question for Lion Investor

Hi,

I like your blog. There is always a write up of the latest events happening in Singapore. As a Singaporean, it is very useful to be updated on all current issues. It provides a one-stop info centre.

Just wanted to check with you: about the current min. CPF sum requirement :
1) assuming I have less than the required min. cpf amt. at age 55
2) I sell my house at age 56 yrs.
3) Will the cpf auto deduct the min. cpf amt. from the sale proceeds?

Assuming:
1) I reach 55 yrs in 5 yrs time.
2) I used $250,000 CPF money to pay for my house, besides the cash portion. The house has been fully paid up.
3) I can sell the house at 1 million dollars.
4) I have $50,000 in OA, $40,000 in Special, $34,000 in medisave.

Appreciate your help on this so that I can plan when to sell my house.

Many thanks!

Elly

My Comments:

Hi Elly, assuming you continue to earn interest from the CPF board (at 2.5/4) and there are no further additions or withdrawals to your CPF accounts, you will have about a total of 144k in OA, SA and Medisave in 5 years time.

About 34k will be set aside in your Medisave as the Medisave Minimum Sum, with the balance 110k in your retirement account (RA).

The CPF minimum sum then will be about 120k, and you can pledge your property for half of this amount. This means you will withdraw 50k cash, keeping 60k cash in your RA. Your pledged property will make up for the other 60k of the CPF minimum sum.

If you sell your house at 56, 60k will need to be returned to the RA to make up for the property pledge. The amount to be refunded will increase due to the accumulated monthly interest on the pledged amount.

If you sell your house before you turn 55, you will need to refund 250k plus accrued interest to CPF. Then when you turn 55, 120k from your OA and SA will need to be set aside for your CPF minimum sum.

Since you will quite easily meet the CPF minimum sum requirement either way, getting a good price on your property might be a more important consideration for you in deciding when is the best time to sell it.

Hope this makes it clear for you.

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