Real Property Gains Tax To Go
on April 1, 2007
Hamisah Hamid, NST Property Times 23-Mar-2007
KUALA LUMPUR: Malaysia will scrap a capital gains tax on
property from April 1, the latest in a string of announcements to help
boost a sluggish property market.
The announcement was made by Prime Minister Datuk Seri Abdullah Ahmad
Badawi in his keynote speech at an investment conference here
yesterday.
"This is long-awaited news for developers and investors alike, and I
hope that it will inject more excitement and dynamism into both the
property and the financial sectors," Abdullah said.
The latest news comes hot on the heels of previous rulings where
foreigners could buy high-end houses without Foreign Investment
Committee approval. Foreigners would also be able to take more than
three property loans from April 1, Bank Negara announced on Wednesday.
Doing away with the real property gains tax would spur more deals in
the sector, said Datuk Dr Gan Khuan Poh, the Asian Strategy and
Leadership Institute?s senior economic research fellow.
"It is positive for the sector as now, it creates demand from not only
locals but also foreigners," he told Business Times.
Property developer Mah Sing Group, which has projects in the Klang
Valley and Johor Baru, expects its sales to increase with the tax
abolishment.
The RPGT, introduced to curb highly speculative activities in the
sector, works on a sliding scale where one would be taxed less if one
holds a property longer.
Malaysians are subject to a 30 per cent tax if they sell the property
within two years, and the rate keeps dropping till five per cent in the
sixth year and thereafter.
Foreigners pay a flat rate of 30 per cent if they sell within five
years, after which the rate is five per cent.
Sunrise Bhd managing director Datuk Michael Yam said the immediate
beneficiary would be the secondary market as property owners would no
longer be trapped in the five-year tax ruling.
"With the multiplier effect and greater transactions, the government
will get back what it loses (from the abolishment of the tax)."