CPF Update - Owners Told To Top-up CPF Shortfall By Amount Sold Below Valuation

CPF Update - Owners Told To Top-up CPF Shortfall By Amount Sold Below Valuation
By: Dennis Wee Group

12 May 2009

In view of the current property market, some owners are selling their properties below valuation. According to CPF Board, if an owner sells his property below valuation and it is a negative sale (ie. the owner is not making any money from his sale and is unable to refund to his CPF account the full CPF utilised plus interest), there is a possibility that CPF Board will require the owner to top-up his CPF shortfall by the amount sold below valuation.

Example:Sale Price : $500,000
Valuation : $520,000
Outstanding Loan : $450,000
CPF Refund + Interest : $100,000

After repaying the $450,000 outstanding loan, the owner is only able to refund $50,000 back to his CPF account instead of the required $100,000. CPF Board may ask the owner to top-up his CPF shortfall by the amount sold below valuation, ie. $20,000.CPF Board has clarified that the above is on a case-to-case basis and owners are required to write to CPF Board to enquire if they are required to top-up any shortfall. Agents are therefore advised to ask owners who are selling below valuation to write to CPF Board to enquire if they are required to top-up any shortfall in CPF before selling their property. The above will not apply to owners who are selling above valuation and it is a negative sale or owners who are selling below valuation and it is a positive sale.