Budget 2014: Real Property Gains Tax (RPGT)
Well, the shoe has finally dropped - the expected RPGT has been increased to 30% for sales within the first 3 years of property ownership, dropping to 20% in year 4, then 15% in year 5 and then back to 0% from year 6 onwards for Malaysian citizens - the 30% applies for the full 5 years for foreign owned properties.
A flat 5% will still be imposed for property gains made by businesses after the 5th year.
Means that those who only just bought properties to flip within the past 2 years or so (given the lead time to sell a property) would be affected immediately - unless the gain itself is large enough to compensate.
But of course, human nature being what it is, the 30% will be a dampener for sure as sellers would want to maximise their returns.
Only thing is pity those who may be in a desperate position, maybe they need money for something else and have to sell a property - then they'll be hit quite badly with this.
Moving forward, would this ease speculative buying?
I don't think so - the cash-rich investors who have been benefiting from no RPGT in the past years should be in a position to continue buying, albeit more carefully. But this will give serious pause to those at the cusp of buying their first investment property.
Overall, I think it would slow the pace of transactions somewhat but housing pressures being what they are, people are still going to need to purchase property. Unless we suddenly flip over into a "renters" culture, which I greatly doubt.
So this would not affect buyers and sellers in the secondary market for properties above 5 years old, and the price appreciation for these should continue to rise. Properties below 5 years old may become scarce because owners will take them off the market - thus driving up the price of available new ones! Unless it is a desperate sale. Ha! So no change after all - property prices will still go up.
A flat 5% will still be imposed for property gains made by businesses after the 5th year.
Means that those who only just bought properties to flip within the past 2 years or so (given the lead time to sell a property) would be affected immediately - unless the gain itself is large enough to compensate.
But of course, human nature being what it is, the 30% will be a dampener for sure as sellers would want to maximise their returns.
Only thing is pity those who may be in a desperate position, maybe they need money for something else and have to sell a property - then they'll be hit quite badly with this.
Moving forward, would this ease speculative buying?
I don't think so - the cash-rich investors who have been benefiting from no RPGT in the past years should be in a position to continue buying, albeit more carefully. But this will give serious pause to those at the cusp of buying their first investment property.
Overall, I think it would slow the pace of transactions somewhat but housing pressures being what they are, people are still going to need to purchase property. Unless we suddenly flip over into a "renters" culture, which I greatly doubt.
So this would not affect buyers and sellers in the secondary market for properties above 5 years old, and the price appreciation for these should continue to rise. Properties below 5 years old may become scarce because owners will take them off the market - thus driving up the price of available new ones! Unless it is a desperate sale. Ha! So no change after all - property prices will still go up.
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