Malaysia real property gains tax abolition timely move

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Under Budget 2022, Malaysian finance minister Zafrul Abdul Aziz said the government would no longer impose the real property gains tax (RPGT) on Malaysians, permanent residents and companies when they dispose of their real property assets from the sixth year onwards. PIXABAY

The abolition of the real property gains tax (RPGT) on properties sold after five years is seen as a timely move that will help boost the Malaysian property market.

KGV International Property Consultants (M) Sdn Bhd director Samuel Tan says this has been a long-awaited measure, as many see it as an unjust way to penalise long-term property owners on inflation.

“With this abolition, we hope property owners will be motivated to upgrade to a desired house without any tax penalty.

“It would be better if the RPGT rate is reduced accordingly for transactions less than five years after purchase to inject some vibrancy to the property market, as there is hardly any gain anyway,” he told StarBizWeek.

PPC International managing director Siders Sittampalam says the RPGT was initially imposed to curb speculators.

“The purpose of the RPGT was to get rid of the people that flip properties, as it was distorting the market. Under Budget 2020, the RPGT was extended beyond five years but this became a disincentive to the market.”

Under Budget 2022, which was tabled on October 29, finance minister Zafrul Abdul Aziz said the government would no longer impose the RPGT on Malaysians, permanent residents and companies when they dispose of their real property assets from the sixth year onwards.

The government also announced that it will provide two billion ringgit ($480 million) in guarantees for gig-workers seeking housing loans.

Observers say this policy will help the B40 group of individuals be in a better position to apply for loans.

“It will have a positive impact on the residential segment,” Siders says.

Meanwhile, Rahim & Co International Sdn Bhd real estate agency CEO Siva Shanker says efforts must be made to ensure that this policy does not get misused.

“It is a good measure to have but if you don’t know how to enforce and manage it properly, it could be misused.

“There are thousands of people out there with money but may not properly declare their income just to show that they don’t, so they can qualify for the loan. But this will only deprive those who truly deserve it.”

THE STAR (MALAYSIA)/ASIA NEWS NETWORK