Now Every owner has to pay tax
Now , you may need to pay for Real Property Gain Tax disregarding how long you have owned the property, unless you are able to dispose it before Jan 1st , 2010.
According to the proposal of Budget 2010, the government will impose 5% tax on gains on disposal of real property despite of the tenure of ownership. Real Estate Investment Consultant Gavin Tee feels it is very unfair to the genuine property owners who have owned a property for many years and who also never have any intention on speculation.
The reason of introducing Real Property Gain Tax Act 1976 was to curb speculation, especially on short term investment. Thus a 30% of tax was imposed on the disposal during the first and second year. 20% on the 3rd year, 15% on the forth year and 5% on the fifth year. Tax will be exempted on the sixth year onwards for the individual investors but remain 5% for the corporate owner. As a result, most of the property investors only dispose their properties after 5 years of ownership. This Act slowed down the investment activities to the property industry.
Besides, if the government impose a fixed 5% tax disregards on the tenure of ownership, a house owner who purchased a house 20 or 30 years ago in Klang Valley will have to pay a “hefty” Gain Tax next year onwards for the disposal.
Gavin quotes an example, a link house purchased 20 or 30 years ago may only cost RM50,000 , and if the owner disposing it now at RM750,000, he therefore will be liable for RM35,000 of Tax. Furthermore, a property owner may never expect this abolished act can be reintroduced with amendment that a gains tax across board without allowance of any holding period. Thus, they may not keep any receipt on renovation or home improvement for tax deduction purpose.
Thus, Gavin recommends the proposal shall only apply to the property acquire on Jan 1st , 2010 or later .
Furthermore, a bungalow in Kuala Lumpur may only valued at RM200,000 years back but now maybe sold at RM 4 million and above. The proprietor thus have to incur more than RM200,000 of property gains tax next year. Whereas under the old act 1976 , if an individual house owner disposes the property after 5 years, there is no tax charged. This proposal will definitely create a big impact on the secondary market, particularly to the properties acquired at an early days and very unfair to property owners who acquired for own stay.
According to the proposal of Budget 2010, the government will impose 5% tax on gains on disposal of real property despite of the tenure of ownership. Real Estate Investment Consultant Gavin Tee feels it is very unfair to the genuine property owners who have owned a property for many years and who also never have any intention on speculation.
The reason of introducing Real Property Gain Tax Act 1976 was to curb speculation, especially on short term investment. Thus a 30% of tax was imposed on the disposal during the first and second year. 20% on the 3rd year, 15% on the forth year and 5% on the fifth year. Tax will be exempted on the sixth year onwards for the individual investors but remain 5% for the corporate owner. As a result, most of the property investors only dispose their properties after 5 years of ownership. This Act slowed down the investment activities to the property industry.
Besides, if the government impose a fixed 5% tax disregards on the tenure of ownership, a house owner who purchased a house 20 or 30 years ago in Klang Valley will have to pay a “hefty” Gain Tax next year onwards for the disposal.
Gavin quotes an example, a link house purchased 20 or 30 years ago may only cost RM50,000 , and if the owner disposing it now at RM750,000, he therefore will be liable for RM35,000 of Tax. Furthermore, a property owner may never expect this abolished act can be reintroduced with amendment that a gains tax across board without allowance of any holding period. Thus, they may not keep any receipt on renovation or home improvement for tax deduction purpose.
Thus, Gavin recommends the proposal shall only apply to the property acquire on Jan 1st , 2010 or later .
Furthermore, a bungalow in Kuala Lumpur may only valued at RM200,000 years back but now maybe sold at RM 4 million and above. The proprietor thus have to incur more than RM200,000 of property gains tax next year. Whereas under the old act 1976 , if an individual house owner disposes the property after 5 years, there is no tax charged. This proposal will definitely create a big impact on the secondary market, particularly to the properties acquired at an early days and very unfair to property owners who acquired for own stay.
I guess it sounds unfair to have this blanket 5% tax imposed on older properties, there should be a cooling off period. Initially the shocker by one tax expert even said the progressive reduction from 30% is brought back besides the 5%, that would have robbed most buyers of profits who bought during the last 2 years when they factored into their earnings the suspension of the RPGT.
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