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GST and property

Posted in GST related, and Personal Finance

My friend, Ms. Lilian forwarded me a very good read. Let me share briefly with all. Will gst push up property prices? Yes and No. It really depends on the type of properties that you are buying. Will GST result in huge increases in property prices? If everything is implemented right, answer is no. Reason being, even today, when you buy properties, you are still paying tax indirectly. Please read a brief statement below from the Royal Malaysian Custom.

The supply of land used for agricultural, residential (including residential house such as link house, semi-detached house, detached house, apartment including serviced apartment and condominium) or general purpose such as burial, playground and religious is exempt from GST. The supply of land and building used for commercial, administrative and industrial purpose such as shop lots, office, retail business, small office home office (SoHo), small office virtual office (SoVo), small office flexible office (SoFo), factories, hotel, motel, inn, hostel and warehouses is subject to GST. 

The document also stated clearly a lot of calculations in terms of what is exempted and how to claim back, the calculations involved etc. One example here:

calculationThere are many uncertainties with regards to GST. There are also a lot of people who said GST will push up property prices many times over due to GST being charged more than once. I do not believe GST will be the main reason why property prices would increase in price. The reason is, even currently, there are also taxes applicable and the 5% GST is not a new tax but a restructuring of all the taxes currently applicable. Many years ago, when GST was first mooted, my colleagues asked me if I support GST, my answer then and my answer now remains the same, YES. It is much more comprehensive. It allows for more flexibility in what gets taxed and what does not. You pay tax when you consume more. There’s nothing wrong with this. Today, do you seriously think there is no tax on the can of Coca Cola you are buying today? Think again. Ask any tax consultants.

If there are any developer sales people telling you to buy NOW before GST comes, this is not true. Please only buy if you truly believe the property you are about to buy has the value that you want and meets what you want.

If there are agents who tells you that if you do not buy today, even for secondary properties, you will regret because prices would rise a lot next year when GST starts, they are not just biased, they are lying. If the prices indeed do go up, GST would not be the main reason merely accounting for a small part compared to what demand can do.

I hope everyone understands that if GST indeed is bad, it is not possible that majority of all countries in the world are adopting it. Even for countries which has adopted it and it brings them negative results, do you think GST would be continued? Last but not least, I have yet to find a really powerful argument against GST beyond the fact that implementation is weak, enforcement is hard etc. These are not the fundamental question, ‘Is GST good or bad’.

Full article can be downloaded from MIA website here:

written on 25 Jan 2014.

next suggested article: Long term uptrend intact – HLIB

Alternatively, read other ‘Penang property articles’

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3 Comments

  1. asali
    asali

    Thanks. Properties prices will jump up a bit if not wrong as it happened to many others country when GST was had just implemented.

    January 30, 2014
    |Reply
    • yes agree asali. no doubt. one time. after that would depend on mkt fundamentals.

      January 30, 2014
      |Reply
  2. Leow
    Leow

    Anyway, the building materials will be subjected to GST , in other words , the prices of properties will be increased !

    August 27, 2014
    |Reply

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