buyers but this actually does more harm
than good in the long run. These rebates,
discounts and “cashback” actually lead
to higher cost for the buyers.
Zero-rated RPGT over-rated?
To those who are not aware, Real
Property Gains Tax (RPGT) is a tax
levied by the Inland Revenue Board
(IRB) on chargeable gains derived from
the disposal of real property. This tax is
provided for in the Real Property Gains
Tax Act 1976 (Act 169). Basically, if you
want to sell your property, you need to
pay tax. The Penjana’s second measure
is to remove RPGT for 3 properties that
an individual owns, so that it could be
disposed without worry. Is this really a
positive move?
Chang:
(So is it time to sell?)
The second measure is to reduce the
RPGT to zero rates and applicable
between the period of June 1, 2020 to
Dec 31, 2021. Individuals are allowed to
enjoy this RPGT for three properties.
If this measure is to allow individuals
to realise their gains and increase
consumer spending, then it is not well
thought out. RPGT is a move towards
containing inflation and speculation. If
prices shoot through the roof, as they
would, there will be calls for bringing
back the 30% tax bracket.
Such volatile changes in the tax system
will not help the economy. What is
needed is a sustainable RPGT. With the
removal of RPGT, the property turnover
rate may artificially be increased to
enjoy the gains made, and it will help
“hot money” to surface. Bank Negara
has to be vigilant in monitoring the
sources of the money moving into the
property.
Should this cap of 70% actually be
taken off?
(Lifting the cap could be detrimental?)
It was announced last year that Bank
Negara Malaysia will be setting a cap on
housing loan margins. Basically, if you
were applying for a housing loan for a
third property or more, you would only
be given a maximum of 70% loan. This
was a move to rid speculators in a time
where property prices were increasing
drastically. It was a smart move to cool
down the market. With the Penjana,
this cap has been lifted. What are the
consequences we may see from this
sort of move?
Chang:
How this measure will help the property
market is difficult to comprehend even
for me. Why the government has to
introduce this measure is unclear, unless
it is to encourage the already “wellto-do”
to borrow more funds from the
banks and create more risks to the
banks.
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