Tax relief, housing bonus for older S'poreans ? Lushhomemedia

Older taxpayers will soon get more income tax relief.

Announcing this on Friday in Parliament during the Budget speech, Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam said the government will double the earned income relief for those aged 55 and above.

Mr Tharman explained this is so that older workers can retain more of their income from work.

Those aged 55 to 59 years old will now enjoy S$6,000 in earned income relief per annum, while those aged 60 and above will enjoy S$8,000.

119,000 older Singaporeans will benefit from this change.

The increased relief will cost the government S$30 million per annum, and will be effective from year of assessment 2013.

The government will also introduce a new Silver Housing Bonus to incentivise elderly Singaporeans to unlock the value of their HDB flats.

This is in the form of a subsidy, part of which will be given as cash.

Mr Tharman noted the current generation of older Singaporeans tend to have limited cash savings and smaller amounts in their Central Provident Fund (CPF) accounts, as wages were much lower in the past.

But these elderly hold substantial wealth in the value of their homes, which can be unlocked.

The scheme is aimed at those aged 55 and above, who wish to sell their flat and move to a three-room or smaller unit.

Net sales proceeds will have to be pumped back into their CPF accounts, which will be matched dollar-for-dollar by the government, up to S$20,000.

Of this, S$15,000 is in cash while the remaining S$5,000 goes into their CPF.

To give an example, suppose there is a retiree couple who each has S$10,000 set aside in their CPF Retirement Accounts.

They sell their three-room flat and move to a studio apartment, earning net proceeds of S$250,000.

This means they now have S$270,000 in their CPF.

Under the scheme, any amount in excess of the CPF Minimum Sum may be retained as cash.

After fulfilling the required minimum sum of S$131,000 for each person, the couple is left with S$8,000 in cash.

Together with the S$15,000 cash in Silver Housing Bonus, they get S$23,000 in total.

The remaining amount in their CPF accounts will be used to purchase a CPF Life annuity plan, which provides a lifelong monthly payout of S$1,200.

Seniors who move from a four-room or five-room unit will get more cash in hand, as sales proceeds are higher.

The government is also enhancing the Lease Buyback Scheme.

Under it, low-income elderly citizens sell part of their HDB lease to the government.

The proceeds go to the sellers? CPF accounts, and is used to buy a CPF Life annuity plan.

In addition, they get a S$10,000 subsidy, of which half is given as cash.

To make the scheme more attractive, the government will be doubling the subsidy per household to S$20,000.

The cash component will be raised to S$15,000.

Similar to the Silver Housing Bonus, the couple may now withdraw any excess amounts after fulfilling the CPF minimum sum, leaving the remainder to purchase the annuity plan.

Meanwhile, Singaporeans Channel NewsAsia spoke to said they have mixed feelings about the government?s Silver Housing bonus of S$20,000.

They said that while the intention is well-meaning, some would think twice about downgrading.

One Singaporean said: ?You have to consider, maybe you are single by yourself at that age, or you are actually with children or with your spouse, you need to look at the overall Budget because some people are pretty comfortable and they don?t want to downsize, whereas some people might need to downsize to get more cash for spending.?

Another noted: ?Presently, I am staying in a four-room flat?when I bought it, that time it was very cheap, about S$70,000. So, I was thinking of downgrading either to a one-room or three-room or studio, I am not sure. I stay in a good place at Toa Payoh?ask me to move out??

A third commented: ?If you sell your property in the open market, surely you will make a lot of money when you downgrade from five to four-room, to three-room?So if the government decides to give S$15,000 cash to the homeowner, if they decide to downgrade, that will be?better right? I mean besides getting profit from the house, we even get some cash from the government, I think that is a good thing.?

Source : Channel NewsAsia ? 17 Feb 2012

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Source: http://lushhomemedia.com/2012/02/17/tax-relief-housing-bonus-for-older-sporeans/

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