CPF Accrued Interest – how it affects the cash refund from your property sale
What is cpf accrued interest?
CPF accrued interest is the amount that CPF members would otherwise have earned had they not withdrawn their CPF savings for their housing repayment. The interest is computed on the principal amount withdrawn for housing on a monthly basis (at the prevailing CPF Ordinary Account interest rate) and compounded yearly.
You are required to refund the accrued interest together with the principal amount withdrawn when you sell or transfer the property.
To find out how much cpf accrued interest you need to refund, you can login to view your CPF housing statement at www.cpf.gov.sg
From our calculations, for a $500,000 HDB flat, your accrued interest is estimated to be 3.2% of your purchase price at the end of 5 years.
At the end of 10 years, the accrued interest would have risen to about 9% of your purchase price.
Assuming the property is not sold or transferred after 30 years, the accrued interest would be a whopping 59% of your purchase.
What happen if the property is sold after 30 years?
Accordingly to current policy, you are required to refund the CPF accrued interest from your sales proceeds. If the flat is sold at market value, you are not required to top up the short fall in cash.
If the flat is sold after you turn 55 years, you are required to refund the Minimum Sum deficiency, or the principal CPF withdrawn for the property plus the accrued interest, whichever is lower. The Minimum Sum deficiency is the Minimum Sum applicable to you when you turn 55 less the balance in your Retirement Account (excluding interest earned).
For more information on accrued interest, please visit CPF website at www.cpf.gov.sg