Property prices are not expected to drop substantially. While there will be a property market correction, a crash is very unlikely in Malaysia. We are not going to see many fire sales, buyers defaulting on loans or subprime crisis.
Our government had increased the real property gain tax (RPGT) in Budget 2012 to cool the property market. Effective from Jan 1, 2012, RPGT will be imposed 10% for properties disposed of within 2 years. Thereafter, a RPGT of 5% will be imposed on properties disposed of between 2 and 5 years of purchase. This replaces the RPGT of 5% for all properties disposed of within 5 years, which was implemented on Jan 1, 2010.
Mr. Lim purchased a property on year November 2009 at RM190,000 and sold on March 2012 at RM265,000 (within 2 and 5 years of purchase). He made RM75,000 from the transaction and the gains are subject to 5% RPGT: