Aaron Tay – Better Service | Better Marketing | Better Results
Thinking of selling your house? Before putting up your house for sale, the first thing you should do is find out your breakeven cost. This will allow you to know your potential profit (or loss), something all experienced realtors would go through with their clients. After which, you can move to the juicy topic of maximizing the value of your house.
We are going to breakdown all the cost which you’ve invested into your humble abode. This will allow you to easily calculate what is your actual breakeven. Feel free to remove or add in any additional cost to suite your needs.
To calculate your breakeven price, you’ll have to take into consideration of a few factors:
For this article we will use the purchase price of 1.2m for easy calculation.
The amount of Buyer Stamp Duty (BSD) paid would depend on when you bought your house. If your house was bought on or after 20 Feb 2018, pls use the second formula.
For ease of calculation, we will assume the property was bought in 2015, resulting in $30,600 paid towards BSD.
Formula for properties above $360,000 at point of purchase:
(Purchase Price × 3%) – 5,400
For properties bought on or after 20 Feb 2018, if your purchase price is $1m or lower, you can use the above formula, if it is more than $1m (online calculator) it would be:
(Purchase Price × 4%) – 15,400
Additional buyer stamp duty might have been paid if you bought your property after 7th Dec 2011 when it was first introduced. The rate which it was taxed depends on two factors, a) your property count at the point of buying the property, and b) your profile at the time of purchase (Singapore Citizen, Singapore Permanent Resident, Foreigner, or an Entity).
Actual rates are available on IRAS’s website.
In our example, we will not be including ABSD.
Unless you’ve bought your house using full cash, you would have either paid interest on your bank loan or, if you have used CPF, accrued interest on CPF for the amount used.
For exact figures, you would need to pull out your bank repayment statements and check your CPF accrued interest via CPF app or website and add them up.
For ease of calculation, we will use the CPF interest rate of 2.5% for bank loan interest. The estimated interest paid excluding principle:
[Loan Amount × (1+Interest Rate)^(no.of years)] – Loan Amount
For our example, assuming an 80% loan of $960,000, after 5 years at 2.5%, the total interest paid to the banks and owed to CPF would be approx. $126k.
You can use the online calculator by CPF.
Summing it all up, the total breakeven cost for this unit would be approx. $1,356,600.
If you would like us to share how some our secrets on how we value a property, drop us a comment below!
After we’ve covered the most common cost associated with owning a property, it’s time to dive into the finer details. Once again, it’s up to you to decide if these costs should be included.
Maintenance fee / conservancy fee – be it staying in HDB, Condo, or Landed, there will always be some monthly fees which you have to pay and might want to factor it in.
Agent fees – when engaging an agent to market your property for sale, they will also charge a commission, typically 2% of the sale price.
Lawyer fees – typically around $2,500 – $3,000 per transaction, once for buying and once for selling.
Seller Stamp Duty (SSD) – if your property is bought between 14 Jan 2011 and 10 Mar 2017, and you’ve held it for 4 years or less, you will need to pay SSD on the sale of your property. If it’s bought on or after 11 Mar 2017, and sold within 3 years of holding, SDD is also payable.
Loan redemption fees – if your house is still under a home loan, do check with your banker if there is any redemption fees involved and if so, how much.
Property tax – your annual property tax bill.
We hope that this article has given you more clarity on calculating the breakeven cost when selling your property and help you make a better decision on what you plan to do.
After calculating your breakeven cost, it would be prudent to do a market analysis to see what other houses in your estate are selling for and to estimate the value of your own house.
Consider engaging an experienced agent to advise you on the right pricing and how get your property ready for sale. Yes, it is necessary to get your unit ready if you want to get the best price for your property.
If you have any questions, feel free to drop us a call or leave a comment below!If we missed out anything, do let us know!