Real Property Gains Tax in Malaysia

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.

Example:

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:

RM75,000 (Property Gains) – RM10,000 (Waived Exemption) = RM65,000 (Taxable Gains)

RM65,000 (Taxable Gains) x 5% (RPGT Rate) = RM3,250 (RPGT Chargeable)

Thus, the RPGT chargeable to Mr. Lim will be RM3,250.

My Suggested Buys for Property Investors In Year 2012

I suggest to concentrate more on student accommodation. The reason is our foreign student population and number of university colleges licenses increase year by year. Most of these university colleges do not place much emphasis on building student accommodation to cater for foreign students and those who come from outstation.

In any city, if you have good infrastructure systems such as MRT stations within walking distance, near supermarket, bank, post office station etc then they will definitely add value to a property. Developers will normally try to look for a location near these stations and investors should keep an eye out for such developments.