RPGT Comparison: (Current) 5% vs. 30%? (Future)
In Malaysia, each individual is entitled to get a once in a lifetime tax exemption for property disposal. The question is: When is the best time to use the real property gain tax (RPGT) exemption? Use the privilege now or wait for the property tax rates is back to 15%, 20% or 30%? I prefer not to use it now. I strongly believe the higher RPGT will be back finally.
Why Use The Exemption Now?
I will only use the exemption now based on two scenarios:
- Unstable Policy and Politic Issues. Not to further explain again about the frequent changes of our RPGT policy here, please refer back to my previous posts.
- High Return of Investment (ROI). If I able to make big money by disposing the property due to the great capital appreciation, then why not to use the exemption so that i have more cash for next investment?
Why Use The Exemption Later?
- RPGT Act 1976: Bear in mind, so far government has never abolished the real property gains tax act 1976 yet although they had introduced few exemption orders in the past few years. In other words, the 20% or 30% RPGT is possible reintroduced back by government at anytime. By the time, that’s the best opportunity to fully utilize the RPGT exemption to maximize your ROI by cutting down the tax fees.
- Besides, of course we will not use the exemption if we know that we are going to sell another property at much higher selling price in two years, which earn you more money.