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Answer:
If the owner of the house dies, the accrued interest is waived.
Think of accrued interest as something the owner needs to return into their CPF account in order to ensure that they have sufficient money for their retirement.
The accrued interest is technically taken out of their profit from the sale of their flats.
If the owner passed away, there is no need to plan for their retirement, and hence the accrued interest is cancelled.
The new owner(s) of the house will now be able to sell the house without the need to pay back any money into CPF.
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Side Note:
The paying back of the accrued interest is to ensure that your "retirement egg nest" is not reduced because of the act of taking money out to buy a home.
And that accrued interest in a way would be funded by the profits (if any) from your home sale.
Even if the sale of the home results in a loss, technically the accrued interest would not affect you much because we technically never have to pay it back anyway.
The accrued interest would keep accumulating in this case, but we technically will never have to pay it back until we buy another home, sell it again, and make profits on it.
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So does this means that the heirs to the property can sell the property and pocket the entire proceeds without returning anything to CPF?
ReplyDeleteHi,
DeleteYup, exactly! 😁
Please read the Answer provided in simple and plain English as above. The new owner hence the heir does not need to return any money or the accrued interest at all, therefore can keep the entire sales proceed. Is that understandable for you or still need further clarification.
ReplyDeleteWhat happens to CPF accrued interest when some of flat's lease let say half of it sold back to HDB under Lease Buyback Scheme after owner reached 65yrs old? Please advise.
ReplyDelete