Home Start here About Services Listings New Launches Districts Buyers Guide Sellers Guide InsightsAnswersGlossaryFAQ Track Record Testimonials Contact Book a call
Glossary · Investor terms

Breakeven point on a property

By Winfred Quek · CEA R073319H · Singapore property glossary

What is the breakeven point on a property? The breakeven point on a property is the price, or rent, at which you recover everything put in, purchase price, every cost of buying, and every holding cost, so you neither gain nor lose. Selling above the original price is not automatically a profit until every cost is counted.

Rates and thresholds change. The current figures are kept in one place: the Singapore property rules reference.

What it is

Purchase price and breakeven price are two different numbers. Breakeven adds every dollar spent to acquire and hold the property, Buyer Stamp Duty and Additional Buyer Stamp Duty where it applied, legal fees, renovation, agent commission on the way out, and Seller Stamp Duty if the sale falls inside the four year window. A sale price above the original purchase price can still be below the true breakeven point once all of that is added in.

How to work it out

Breakeven sale price = purchase price + buying costs + total net holding costs incurred while owning + selling costs, typically agent commission and legal fees + Seller Stamp Duty if inside the four year window, at 16, 12, 8 or 4 percent depending on exactly how long the property was held. For a rental unit, the equivalent monthly breakeven rent is simply the total monthly holding cost, see the holding cost entry.

A simple illustration

Bought at $1,000,000, with buying costs (stamp duty, legal fees, renovation) of about $40,000, three years of net holding costs around $18,000, and expected selling costs (commission and legal) of about $25,000, the true breakeven sale price comes to roughly $1,083,000, before any Seller Stamp Duty. These are illustrative numbers only, not a quote or forecast for any real property.

What beginners get wrong

The most common error is comparing the sale price only to the original purchase price and calling the difference profit. A second is treating the CPF refund, including the 2.5 percent accrued interest that must be returned to your CPF account, as if it were profit, it is simply your own money and its interest being returned to you, not a gain. A third is not checking whether the sale still falls inside the four year Seller Stamp Duty window before assuming a clean exit.

What to check

Run the actual figures with a lawyer or check directly with the CPF Board on the exact refund amount owed, add up real receipts for renovation and other costs rather than estimating from memory, and confirm where the sale date sits relative to the four year Seller Stamp Duty window if minimising duty matters to the decision.

Have a question about your own numbers?

Winfred runs the real figures for your situation before you rely on a rule of thumb. This is general education, not personalised advice, book a call to talk through your own case.

Book a free 30 minute call

Winfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is general property and investing education only and does not constitute financial, investment, or legal advice. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.