Referring back to the previous article on our property journey, we have progressed further. To recall, there was a failed offer. Thank God that there was another buyer who came and view the house for the 2nd time. They made an offer, and we negotiated some terms. We closed at an agreed price. However, the exercise date is not due yet, I am praying that nothing wrong will happen to this.
We took a risk to put in a check close to S$15k (approximately, don’t want to disclose the exact) for 1% of the house without our matrimonial house being exercised yet. We are taking risks because if our buyer does not exercise, we will be stranded in a difficult financial position. We will be exposed to ABSD (17% for Singaporean buying 2nd unit) for the new unit. Alternatively, if we don’t exercise, it means our 1% will be forfeited. We are not even sure whether that is a possibility or if definitely we need to exercise.
We will need to complete the new unit within 30 days which is the end of December.
Latest update 16th December 2022
Our buyer has exercised the option to purchase. We went to the lawyer to prepare for the option to purchase the new unit by end December (like a buy Call option). The stamp duties are already close to SGD 45k. That’s an expense contributed to nation building. November net worth is quite interesting, the non-current asset is considered as liquid asset, let’s say SGD 900k (approximate value). This immediately recognized the gain from the book value of the property. Throughout the years, for net worth calculation, I took the book value of property base on the purchase price dated in 2016 and did not revalue throughout these years. There was depreciation per year coupled with property appreciation which was ignored. I only recognize based on the final sale value.
Currently, we bought this resale unit from the firsthand buyer for approximately SGD 1,500k. We help the seller realized a capital gain close to SGD 500k. We intend to borrow SGD 1,000k and put in SGD 500k as down payment. This means non-current liability will be closed to SGD 1,000k with SGD 500k as non-current asset, SGD 400k as current asset. The SGD 400k may split into cash and CPF as well. This will further differentiate them into different categories. We are still trying to optimize this. The basis is to have spare cash to deploy if there’s a good 2nd property for us to buy or market presents an opportunity to buy more shares.
We are back on the path of taking on debt.
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