New fixed rate of 5% Real Property Gain Tax (RPGT) has been proposed in Budget 2010 presentation recently. It will be implemented start from 1st January 2010. So, what are the impacts of 5% RPGT on property investment in Malaysia?
For Home Buyer who,
Scenario 1: Buying New House from developer
- If buying for own stay, you are not really affected as you may notice the developer and banker still offering attractive packages for new property
- If buying for investment purposes, at least you are now aware about the 5% RPGT and it should be taken into consideration.
Scenario 2: Buying Second Hand house from sub-sales market
- As a buyer, you are not affected directly because the RPGT will be imposed only on the gains from the disposal of the property for seller.
- However, it has a minor impact on sub-sales market. Sellers start to hold back their selling plan due to the changes and uncertainty. Both seller and buyer are now in the ‘wait-and-see’ mode, hope for good news from Government of Malaysia.
For Home Seller who,
Scenario 3: Selling their house bought from developer or sub-sales market within short period (5 years, 3 years or earlier)
- I think it is fair for Government to impose tax on those Investors who are making money from their property investment at a reasonable rate.
Scenario 4: Selling their house which has been bought/built for own stay many years ago (20 years, 30 years or even longer time)
- RPGT was introduced mainly to prevent the property investor over speculates the market and cause bubble. Therefore, it is not fair to impose RPGT on home seller who bought their house thirty years ago. Some of them bought for own stay, not for investment.
- Generally, most of the property experts believe the sub-sales market will be slow down for this coming few months but for short term only.
Well, don’t be surprise; anything can be changed over the night in Malaysia. Just imagine, 30% of RPGT was imposed on foreigner few years back, and then become 0% after announcement of RPGT Exempted started from 1st April 2007, but now 5% of RPGT is coming back. The inconsistent policies of RPGT have confused our foreigner investor and affected their confidence to invest in Malaysia.