What is CPF Accrued Interest? — Singapore property glossary

Q: What is CPF accrued interest?

CPF accrued interest is the 2.5 percent a year that CPF Ordinary Account savings would have earned if not withdrawn for a property. It compounds over the holding period and is refunded to the owner's own CPF account, not forfeited, when the property is sold.

What is CPF accrued interest? CPF accrued interest is the interest, 2.5 percent a year and compounding, that CPF Ordinary Account savings would have earned had they not been withdrawn for a property. When the property is sold, the principal used plus all accrued interest must be returned to the owner's CPF account before any cash is released.

Accrued interest is often misunderstood as a penalty; it is not. It is the owner's own retirement savings, and the interest, being returned to CPF rather than lost. The confusion arises because it visibly shrinks the cash a seller walks away with.

The liability compounds the longer a property is held. As a worked example, S$300,000 of CPF used grows to roughly S$339,000 owed back after 5 years, S$384,000 after 10 years, and S$491,000 after 20 years, all at the standard 2.5 percent rate.

This is a central number in any decoupling, upgrading or sale decision, since it directly reduces the net cash proceeds available for a subsequent purchase, and it should always be modelled before assuming a sale will fund the next down payment.

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

CPF accrued interest

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