Real Property Gains Tax? (RPGT) 3 personal thoughts.

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Do I like RPGT? Yes, I actually prefer that we have RPGT because it was aimed at halting speculators in the property market. Do I like when RPGT is now extended to even sellers of properties of over 5 years? No, I do not like. I think it’s not a fair deal for sellers, especially those who have bought and have held the property for a long time. For example, 10 years? Surely these purchases were not by speculators. None that I know of told me that they are speculating on property by buying and keeping for 10 years…

These days, when I am asked about RPGT, I share 3 things. First is for first-time home buyers. Please be objective. If we are deciding whether to buy or not to buy, RPGT should not be a major consideration. It should be on the WHY and our affordability instead. (click here to read) Reason it should not be a major consideration is because it’s based on the gains / profits and it’s many years down the road. Assuming we sold the unit at the 6th year because we wanted to upgrade to a better home and we got a profit of RM100,000 the applicable RPGT is just RM5,000. Come on… You gain RM95,000 still. Why do we throw away potential RM95,000 because of a RM5,000? I am not speaking about those who with intention to buy and flip within 2-3 years yeah.

Sentiment is important. This is the second thing I share. RPGT is not much BUT because of its announcement, it caused the sentiment in the market to turn bearish. Way too many people were talking about it and many who does not understand enough suddenly chose to wait and see instead of buying. Every media and everyone was sharing it via their Whatsapp or Facebook. By the way, it did not affect just the buyers. Some sellers who were ready to sell also decided to pull back. This definitely affected transaction numbers and sentiment is affected further. Everyone knows that all markets are usually herd based. When more people decided not to do anything, then more people will decide to follow.

Third thing I share is that that RPGT should only be used to stop speculation and not as an income generator for the government. As it is, there are already the stamp duty portion which is payable to the government when we sell buy the property anyway. The more transactions, the more stamp duty which will be paid to the government. However, when the overall transactions go down because of negative sentiment situation, the total stamp duty is also reduced. Surely this was not something the government wanted in the first place.

Happy understanding yeah. Buyer should still buy (RPGT is not the deal breaker). Buyer should be objective. Look at why, not following what most friends say. Last but least, the relevant government ministry can rethink. Many times, there is nothing wrong to change if the policy did not cause the right effects which it was supposed to achieve. When a better decision is made, it will surely help everyone and not just one stakeholder. Cheers.

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