Keep and Share logo     Log In  |  Mobile View  |  Help  
Visiting Ong Ana's Shares (account name: ongana707)
Select a Color
CPF Accrued Interest

How It Can Affect Your Property Cash Proceeds


What is CPF Accrued Interest?


First things first, its is applicable to all CPF members who have use funds in their CPF Ordinary Account (OA) to pay for  down payment and monthly mortgage loan installments for their house.


It is the interest amount that CPF members would have earned in their OA, had they not withdrawn for their housing needs.


With CPF’s goal to ensure that we have sufficient retirement savings, when the property is sold, owners will need to return the drawn down principal amount PLUS the Accrued Interest, back into your CPF OA.


This amount may include the following:


  • The initial down payment that was withdrawn from our CPF account


  • The monthly installments that was withdrawn to pay our mortgage loan


  • Any HDB housing grant(s) that we received for our HDB flat


  • The CPF Accrued Interest on all the above


Note: Our HDB housing grants are given to us via our CPF when we buy our BTO or HDB resale flat.


This means that we will start to accumulate CPF Accrued Interest on these funds as well.

Now, with this understanding, let us  take a good look into this policy and learn how to maximize to our best.


Mr and Mrs Huang have extra cash on hand and decide to upgrade their home, and purchased a private property for $800,000.

Once their HDB reaches MOP of 5 years, they will rent their 4-room HDB flat for $2,000 a month as passive income while staying in their private property.

Our quick calculations:


  • They will have spent $96,000 (12% x $800,000) on Additional Buyer Stamp Duty ABSD
  • The rental income is estimated at $14,000 a year [($2,000 x 12) – ($10,000 accrued interest)]
  • At $14,000 a year, they will need about 7 years to recover the initial $96,000 ABSD paid
  • And after 15 years, they will make an estimated income of $210,000

However, at the end of 20 years (5 years to reach MOP + 15 years of rental), the CPF Accrued Interest stands at $223,515.75.

So, if they decide to sell their HDB flat after 20 years, again, the chances of property negative sales is relatively high.

Why? Simply because the rental income made is less than the accumulated CPF Accrued Interest ($210,000 vs $223,515.75).   (Referring to the table above)

And so, it may not be such a good idea to rent out the HDB flat and purchase a private property for your own-stay


Visit our site for more information -

Creation date: Apr 10, 2020 9:25pm     Last modified date: Apr 10, 2020 9:28pm   Last visit date: Mar 20, 2021 10:03am
    Report Objectionable Content