I REFER to the letter from Mr Michael Chua, 'Fix resale levy as percentage of cash proceeds from sale' (July 7).

The resale levy is imposed to reduce the subsidy on the second subsidised flat. It is payable only if a household chooses to buy another subsidised flat from HDB.

This is to ensure fair allocation of limited housing subsidies so more can be given to first-timers who have yet to enjoy any housing subsidy.

It is not a capital gains tax, as those who sell their first subsidised flat and buy a resale HDB flat (or private property) do not need to pay the levy.

Therefore, the resale levy is not linked to proceeds received from the sale of the first subsidised flat in the open market.

We thank Mr Chua for his feedback.

Lily Chan-Wong Jee Choo (Mrs)
Acting Deputy Director (Policy & Property)
for Director (Estate Administration & Property)
Housing & Development Board

This article was first published in The Straits Times on 18 July 2008.