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ources say it is likely that an announcement on the matter will be made during the Invest Malaysia 2007 conference jointly organised by Bursa Malaysia (KLSE: BURSA, stock-code 1818), RHB Investment Bank and UBS (NYSE: UBS, stock) Securities.
RPGT is a tax on profits from a sale of properties less than five years after they were bought. Only the profit arising from the disposal of a property is subject to RPGT. The tax will be assessed based on a percentage ranging between 5% and 30%, depending on how long the seller has held the property. For Malaysian individuals, there is no RPGT if the property is disposed of after five years. For foreigners, a flat rate of 30% is applicable within five years from the purchase of the property, and 5% on the sixth and subsequent years.
There’re even talks of stamp duty on property transactions being waived on top of the abolishment of RPGT. Stamp duty waiver would be the more significant factor given that it is based on the total purchase value. Example: a two-and-a-half-storey house worth about RM 628,000 will attract a stamp duty of RM 12,000 – a small figure percentage-wise, but a large sum in absolute terms.
With property prices in Malaysia being generally cheaper, and with the ringgit still considered a cheap currency, observers feel that any liberalisation in the property sector could see foreigners pumping money into the sector.
Back to main justification that Malaysian government will most likely abolish RPGT is the fact that the rosy economic picture painted is not that promising after all. Historically, stocks bull-run will fill-over directly into property sector – people who made tons of profit from the stock market will have nowhere to park their money but to property, obviously. That was exactly what happened during the 1993 Super-Bull run. People were seen laughing their ways to the bank by buying and selling properties with minimal booking fees. The speculation caused the property prices skyrocketed in an alarming rate that the government introduced the RPGT.
But at current situation, the property market is not attracting the expected demand, if the so-called current bull-run is used as the gauge against the 1993’s bull. Needing a shot in the arm desperately, the government needs to see the property sector to take off in great strength if it wants to see the Iskandar Development Region (IDR) to even attract some excitement amongst the voters in preparing for the coming general election. Already the IDR project has all the doubts of success if you were to conduct an interview with person on the street. However, the abolishment of RPGT will definitely boost the property sector and hopefully it will create the wealth the same way before.
Amongst beneficiaries of property companies are players such as:
Other Articles That May Interest You …
- Could Property Stocks Take Off In A Bigger Wave?
- IDR-Nusajaya – Another White Elephant Dooms to Failure?
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March 20th, 2007 by financetwitter
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