I think my good friend in Penang will be slightly happier. He was asking me about the properties he acquired long ago which he needed to dispose now for his daughter’s tertiary education. He will ‘lose’a lot due to the sudden announcement of the 5 percent Real Property Gains Tax regardless of how long one has kept the property. Before this, RPGT will no longer be charged as long as one has held the property for over 5 years. It was a cooling measure to keep speculators out of the property market previously. Here’s how you calculate the RPGT
Article in NST here. Finance Minister Lim Guan Eng said that the RPGT valuation on property would only be calculated from the year 2000 onwards, says Finance Minister Lim Guan Eng. He said, “There were parties that raised concerns that if the property was bought since 1960 and later sold, how much is the tax that they need to pay. Therefore, the ministry had set the date of valuation to begin from the year 2000 despite the land being owned since 1960. It would only be valued from 2000.” This was to provide clarity to all the feedback from concerned property owners who have bought and owned land extending decades before 2000.
By the way, this is NOT for properties bought BEFORE 2000. This meant that all properties regardless of when they were bought will use year 2000 as the valuation year for the RPGT calculation. Technically, one should ‘save’ a lot from this versus if year 1988 was used for example. Although this does not take away the thinking that the government is doing this for more revenue (SST vs GST), it’s important to note that this may also be done in conjunction with the measures to reduce the current unsold properties which are in the market. Owners who decided not to sell may also be reducing the supply of available units for sale in the market. Personally, I hope this is NOT going to be forever because there is really no justification to this. Many investors may now stop buying properties because now there’s an extra hurdle that will never go away. Happy buying.
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written on 23 Nov 2018
Next suggested article: Stamp Duty for unsold property and RPGT for all