Tag Archives: real property gains tax

Real Property Gains Tax (RPGT) Rates Increased in Malaysia

As everybody known, the RPGT rates on gains has been raised from disposing of real properties with effect from 1 Jan 2014.


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Under this new property ruling, any gains on properties sold within the period of the first 3 years, the RPGT rate is increased to 30% to individual and companies as well. Those holding within the period of 4 and 5 years, the RPGT rates were increased to 20% and 15% respectively. However, for properties sold in the 6th year or thereafter, no RPGT is imposed on any transactions happen on residential units whereas commercial ones are taxed at 5%.


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For foreigners, the RPGT is imposed at a rate of 30% for properties sold within the holding period of 5 years, and RPGT rate is imposed at 5% for any properties sold in the 6th year and thereafter.

Illustration

Let say Mr. Lee bought a unit of condominium from a property developer on 1st March 2012 at a price of RM 265,000 and sold his property on 1st Jan 2014 at RM 350,000. So, this property is sold within 2 years from the date of purchase.

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General Election Pose Risk to Property Sector?

malaysia property

Although there is no property bubble, the recent hike in real property gains tax (RPGT) causes the consumer remain caution of rising housing prices. Such policy could put a pause to home purchasers who may anticipate further measures which would improve the affordability. This in turn could hurt the developers’ new sales of property.

However, any drop in demand would be temporary until the general election is over, and the general election results could bring major impact on people confidence and demand.

malaysia house prices by state

There could be stock market volatility just before and after election as was in the 2008 election, which could affect home purchaser’s decision making. There could be higher possibilities that many purchasers will stay on the sidelines for election to be over before making any purchases. Thus, this would likely hurt the property demand in the 1st half of the year.

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