RPGT to go or stay? Stay, please. Tweaking it is fine.  

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I am for Real Property Gains Tax (RPGT). I support it. Please do NOT remove it for now. However, I am against having RPGT for properties sold after the end of 5 years. Is the government looking at this for tax income or looking at this as a deterrent against speculators? If this is as a deterrent, then it can be enhanced. If this is another tax income, then please explain why is this needed and why against real estate because I do not see other kinds of investments getting taxed for the gains after 5 years….? The below would be House Buyers’ Association’s proposal.

Article in edgeprop.my here. HBA’s honorary secretary general Datuk Chang Kim Loong said HBA disagrees with the continuation of RPGT held for more than 6 years because this punishes genuine homeowners and long-term property investors.

He says HBA has its recommendations on RPGT.

#1.   increase the RPGT tier rate for disposal within the 2nd, 3rd and 4th years with a corresponding increase of additional 5%: meaning instead of 30% (first to third year) increase the rate to 35%. HBA further suggests that the rate of RPGT imposed on foreign owners be increased correspondingly; or

#2.   That the ‘cut-off point’ or grace period be pushed back by 1 or 2 years to the 6th or 7th year. The previous ‘cut-off point’ of 5 years to be pushed slightly further and beyond that point no RPGT shall be payable on the disposal. Any disposal after the new cut-off point will not attract RPGT; or

#3.   Date of Acquisition to be changed to Date of Vacant Possession.  For Properties bought under construction, this is to ensure that speculators must hold on to the properties longer before selling it if they wish to pay lower RPGT. Please read the article in full here: Article in edgeprop.my here.

I agree with suggestion 1#1. I also think I could agree to suggestion #2 which is for the end of 5-year period be extended to end of 6-year or even 7-year period. Anyway suggestion #2 and #3 has similar results. I continue to tell everyone to buy their first property for own stay. Investment properties can be from the second one onwards. If one is still renting, just buy a home to stay first. Start paying mortgages and continue saving so that at the end of the 6th or the 7th year, one has enough downpayment for the next upgrade.

That first-property which was a home could then be sold (to add into the down-payment amount) or rented out. By then, the rental may have caught up and it could even yield positive rental yields. That would be a win-win situation for the owner. First home with positive rental yield and he gets a second property which is an upgrade to stay in. I prefer a slow, steady and healthy market versus a highly speculative one. Happy understanding.

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