Real Property Gains Tax 10 percent for First Two Years

 

In Budget 2012 Malaysia, a new structure of RPGT (real property gains tax) was introduced as following:

§  1st Year = 10%

§  2nd Year = 10%

§  3rd Year = 5%

§  4th Year = 5%

§  5th Year = 5%

§  6th Year = 0%

Compare to Budget 2011, the RPGT was fixed at 5% flat rate on the gains from the disposal of real property within the first 5 years.

§  1st Year = 5%

§  2nd Year = 5%

§  3rd Year = 5%

§  4th Year = 5%

§  5th Year = 5%

§  6th Year = 0%

As an investor’s point of view, if I able to flip my property within two years at a handsome return, I will not mind to pay 10% tax since the balance of 90% capital gain still with my pocket.

For the same reason, the new RPGT rate will not really have a big impact for cash rich speculators, the speculating activities will still goes on. There are still plenty of cash rich millionaires in Malaysia.

For small speculators, most of them are already ‘killed’ by the maximum 70% LTV (loan-to-value) housing loan policy for third property implemented since November 2010. So, the changes of RPGT are meaningless for them, too.

For genuine own stay home buyers, supposedly the new RPGT was introduced to help curb property market speculation; unfortunately, unless you are looking at new development from PR1MA and/or suburban areas for a cheap house, else, I afraid the property prices in prime location will be remained solid in near future.

Conclusion for myself, I will remain my existing plan – STOP BUYING UNDERCON PROPERTY and LOOKING FOR RENTAL PROPERTY FROM SUBSALES MARKET, PATIENTLY.