Many months ago, someone told me that due to Real Property Gains Tax (RPGT) he does not find the property market to be that attractive anymore. This same person has been saying the same thing for the Malaysian property market. To him, it’s always grass is greener on the other side. I asked if he is giving up the forest for one tree. (okay, not the best example… haha). Truth is, our RPGT is only when the property we sold have gains. There is nothing to be paid if there are no gains. (profits)
Now, the more important question is this. Assuming that property really do allow us to gain RM100,000 and 95% is ours and 5% is to be given to the government as RPGT, should we proceed or forget the deal? If you ask me, of course I will proceed. Most important is to do enough due diligence yeah. Oh yeah, how much do you think the government has gained thus far from the RPGT for properties held for over 5 years? Not too shabby really because this 5% RPGT after 5 years was announced in Budget 2019 and it has just been implemented this year.
Article in edgeprop.my The government collected RM81.52 million in RPGT from January – August 2019. This is from the disposal of properties for more than 5 years and total transactions for this would be 8,554 transactions. Deputy Finance Minister Datuk Ir Amiruddin Hamzah said that the government has no plans to abolish tax on disposal of properties held for more than 5 years.
He said this new RPGT measure helped to curb speculative activities that put pressure on housing prices. He said, “In the 2020 Budget, the government has improved the RPGT treatment for the disposal of properties after the fifth year by re-setting the base year to determine market value from Jan 1, 2000, to Jan 1, 2013. This means that the market value in 2013 would be used even for properties acquired prior to that year.” Article in edgeprop.my
If the government has collected RM82 million from 8,554 transactions, that’s an average of RM9,937 per transaction. If the government is gaining RM9,937 per transaction, it meant that on average every owner is gaining RM198,737! Guys, think carefully. Buying a property and gaining nearly RM200,000 and giving away RM10,000 is a no-brainer! Please proceed to continue our property investment journey yeah.
I am not sure how many flippers / speculators who come into the property market to buy a property to hold for at least 5 years before selling. If there are such people, they really do have lots of patience and I salute them. 😛 Anyway, since the valuation is now based on 1 Jan 2013, the RPGT to be charged should be lower than if the valuation was based on year 2000. I suppose this can be considered positive for the property market.
RPGT remains at just 5% when we have held the property for over 5 years. If we found any undervalued property for example, it’s still much better to buy and give away 5% of the gains later versus skipping the purchase because we think so negatively of the 5% and not objectively. Continue evaluating yeah. The best way to wait is to buy and then wait. The worst way to wait is not knowing what’s the price level which we are waiting… Cheers.
Next suggested article: No transactions, no changes in prices lah