Do property sellers have to refund option monies to their CPF accounts?
In a property sale, there are CPF refund rules to be fulfilled before the transaction can be completed. For some sellers, they may have to refund the option monies received from their buyers, such as the option fee and option exercise fee, to their CPF accounts, in order to complete their property transaction.
The need to refund option monies depends on the circumstances of the sale:
- Whether the sales proceeds were enough to make the full required CPF refund to the sellers’ CPF accounts, and
- Whether the property was sold at or above market value
Upon the sale of a property, sellers do not have to top up the shortfall in cash to their CPF accounts if the selling price (which includes the option monies) after paying the outstanding housing loan (i.e. the sales proceeds) is less than the full required CPF refund, and the property was sold at or above market value.
Conversely, if the property was sold below market value, sellers will then have to top up the shortfall in cash.
However, in both cases, sellers have to refund the option monies to their CPF accounts as it forms part of the selling price.
Sellers do not have to refund option monies only when the sales proceeds, after excluding the amount equivalent to the option monies received in cash, are enough to make the full required CPF refund to their CPF accounts.
Refunded amounts will be returned to the sellers’ CPF accounts in proportion of the amount of CPF they had used towards the property.
In addition, if the sellers are aged 55 and above and had pledged to refund an amount withdrawn from their Retirement Account savings in cash, they will also need to refund the pledged amount. The amount refunded to their CPF accounts will be used to top up their Retirement Account, up to their Full Retirement Sum. Thereafter, any balance housing refunds will be paid to the sellers in cash.