Calculating CPF OA allowable for old properties that do not cover the buyer until age 95 involves several steps. Below is a step-by-step guide:
Step 1: Gather Information
Collect the necessary information, including the property purchase price, property value, the remaining lease of the property, and the age of the youngest buyer.
Step 2: Determine Valuation Limit (VL)
The Valuation Limit (VL) is the lower of the purchase price or the property value at the time of purchase. Use the following formula:
VL = min(Purchase Price, Property Value)
Step 3: Calculate Withdrawal Limit (WL)
The Withdrawal Limit (WL) is the Valuation Limit (VL) minus the prevailing CPF balance at the time of purchase. If you have not used CPF for the property before, the prevailing CPF balance is zero.
WL= VL- CPF Balance
Step 4: Determine Maximum CPF OA Usage
The maximum amount that can be utilized from the CPF OA is the lesser of the Valuation Limit (VL) and the Withdrawal Limit (WL).
Maximum CPF OA Usage= min(VL, WL)
Step 5: Consider Remaining Lease and Pro-Rated Factor
If the remaining lease of the property does not cover the youngest buyer until age 95, a pro-rated factor may be applied. This factor adjusts the Valuation Limit based on the proportion of the remaining lease to the ideal duration.
Adjusted VL = VL x(Remaining Lease/Ideal Lease Duration)
Step 6: Finalize CPF OA Allowable
The final CPF OA allowable is the minimum of the Adjusted VL and the Withdrawal Limit.
CPF OA Allowable} = min(Adjusted VL, WL)
Step 7: Seek Professional Advice
Seek Professional Advice to ensure accurate calculations and obtain personalized insights based on your specific circumstances. Contact me now to embark on this journey towards a new chapter in your life.