This changes the equation when disposing Real Estate.
RPGT is back to bite.

There are conflicting reports on weather RPGT is back to pre Apr 2007 levels, or just 5%.
Either way, removes speculation, but will dampen the property sector.

http://thestar.com.my/news/story.asp?file=/2009/10/24/budget2010/4970584&sec=budget2010

pm mentioned 5% only in his speech. but most newspapers saying it's 30%-5%, on sliding scale depending on how long owned.

very bad news for property sector. will kill foreign investment.

Kalai

Government bailouts have consequences.Increase in taxes is one of them.Increase in taxes means the average citizen has less money to propel what meager growth there was .

Just another nail in the coffin of growth going forward and another reason to look at property in a skeptical light.Oversupply (primarily KLCC )and poor yield now is joined by a capital gains tax.

Did you really expect to be given handouts and bailouts in return for nothing?There is always a cost .What driver is now left for property (particularly KLCC)..?

Lets remember no capital gains tax was meant to be a driver for upward prices .However agents are great ..they always say when prices go up after one sale the price of EVERY unit has gone up but when the price goes down it is suddenly a one off firesale.You have to love their reasoning and I am sure they will come up with some nonsense spin on the reintroduction of the capital gains tax.I am sure they will spin some line that it is a positive.!

My belief of the tax is that it is the sliding scale that was used before...whatever it is, it is a negative if you give it any thought.

One good thing is it benefits the rakyat. That is pencapaian di dahulukan & rakyat diutamakan. With such taxes it discourage people from holding up to many properties depriving those in need.

People are smart knowing when there is demand. They will surely have inside contacts to get what they wanted using coffee money. With such implemented taxes it be a pain to their profit margin. The idea is to discourage hoarding & manipulation of property market.

owner will just increase the property price by 5% b4 selling....... LOL

confirmed that it is 5%, not sliding scale starting at 30%. good news for all of us.

Read the final statement in the papers it's 5%. However this may lead to increase for ex RM300K property will cost RM15K increase.

From the budget, the govt is keen to revive abandon project by their cronies. Guess that's where the money will come from.

wow...........! no more 30% RPGT........ expecting fire sales for those who brought the properties less than a year ago....!


guys...! time for buying spree....!!!

Looks like Govt is encouraging property speculation and punish senior citizen who bought and stay for > 20 years. I think, they should NOT have RPGT for > number of yeras [previous is 6 year]

cheers

Does the S&P have to be signed by 31st December 2009, or does the deal need to be complete by then?

The imposed of 5% tax will rush the seller to sell their property this year or markup their price by 5% to transfer the cost to buyer.. (Likely to markup next year)

It will push the property price higher than to control the property market!!
Hope the government will think thru it again....

I think if the seller marks up by 5% he/she will still lose money.

Take for example a house on sale RM100,000. Without RPGT they get the exact wanted amount. However with RPGT he lose RM5000 with RM95,000 as nett income.

If the seller marks up by 5%. He/she will get RM99,750 after taxation by selling at RM105,000. Hence he/she lost RM250. To make calculation simple the seller will gain RM4,500 after taxation by selling at RM110,000. That is he/she marks up the property value by 10% more as round figure.

Your post from what I can see assumes he sold at 100,000 MYR and MADE MYR 100,000 profit so he should mark up by 5%.(You state above a house on sale at RM 100,000)That seems highly improbable !If he sells at RM 100k he will not lose 5 k as you put it.He only pays tax on the profit.He may have bought the house at 90k with associated stamp duty,fees etc etc of 8k.Therefore he only makes 2k and pays 5% on it..that is 5% of Rm2000 which is obviously MYR 100!

Furthermore a seller at anytime can ASK any price he wishes with or without RPGT.GETTING THE ASK price is the problem!He can add or subtract x and y from the ask to suit his requirements but he still has to find a buyer willing to pay it.With or without RPGT he will no doubt try for the max he can get from a willing buyer.

To me you are assuming in your post that RPGT is like stamp duty and 5% is paid on the absolute amount.My understanding is that it is just a tax on profit.Make no money pay no tax..simple..or have I misunderstood ?

This statement is extracted from PM speech (Published in theStar newspaper website):
"Government proposes that a tax of 5% be imposed on gains from the disposal of real property from 1 January 2010."

The 5% tax should be on the profit make from property sales...

Wonder.... How the government know how much is the profit make by seller? S&P price from the seller when he bought the property and the selling price he manage to fetch? How if the property is inherited?
Example:
The grandparent bought a land in 1920's with only 5k and the land appreciate to 100k now.
RPGT = (100k - 5k) * 0.05 = RM4,750?
In this example, the seller will always mark up another 5k to cover it's tax!! ..
Just a simple and logical thinking....

Anyone has a better perception on this? Is this the implication from restoration of RPGT?

What I mean is the owner buys the property for RM100,000 for example 1 year. He/she was thinking of disposing it for upgrades. In fact no one would sell at lost right?

Why do all you guys suddenly assume the SELLER has any ability to mark up a further xK because of CGT.It seems that all SELLERS want MAXIMUM price regardless of the law that is in place.I mean GREED IS KING and I never see any seller giving a willing discount at anytime.There is nothing logical about thinking that a seller has ANY ability to increase price and get it.If last week before capital gains tax he was asking 200k AND COULDN"T SELL why do you think that now he can increase to 210k and WILL SELL!...you guys all assume that price and supply have no effect on sales .I wish that was the case.Japan has properties selling cheaper than they were in 1990...people sometimes lose money and they are still selling them.Of course they don't want to lose but hey that is life.Citigroup was a $50 share but tanked to under a dollar but LOTS of people sold them at a dollar and NO ONE was making money at that price!A dollar is better than nothing.

Kim, you may have got your general prediction about property prices all wrong, and I will answer those points later, but on this point regarding prices being marked up I agree with you.

Sellers will not be able to mark up - well they can mark up but they will not get their price as you won't find any buyers who will want to pay 5% more just because some tax got introduced.

Property wise depends solely on supply on demand. In fact most buyers would have already lose money paying off their bank interest on yearly basis. However with the implementation of RPGT will inccur additional burden to their finances. If anyone can sell more in proportion to market value. They are indeed breaking even with their overhead margins after settling off their loans. Perhaps maybe not too in order to escape further price decline of own real estate.

This exceptional cases for those who are well off. With RPGT is nahhhh for them.
1. buying property using cold hard cash without financing.
2. property inherited from ancestors/parents all fully paid up.
3. selling existing inherited property with profits & then buying new ones of better quality.
4. Hold on for sometime renting & sell when prices increase further more due to demand/supply.

In short Malaysia is BOLEHland, the rich gets more wealthier.

kim massey wrote:
Your post from what I can see assumes he sold at 100,000 MYR and MADE MYR 100,000 profit so he should mark up by 5%.(You state above a house on sale at RM 100,000)That seems highly improbable !If he sells at RM 100k he will not lose 5 k as you put it.He only pays tax on the profit.He may have bought the house at 90k with associated stamp duty,fees etc etc of 8k.Therefore he only makes 2k and pays 5% on it..that is 5% of Rm2000 which is obviously MYR 100!

Furthermore a seller at anytime can ASK any price he wishes with or without RPGT.GETTING THE ASK price is the problem!He can add or subtract x and y from the ask to suit his requirements but he still has to find a buyer willing to pay it.With or without RPGT he will no doubt try for the max he can get from a willing buyer.

To me you are assuming in your post that RPGT is like stamp duty and 5% is paid on the absolute amount.My understanding is that it is just a tax on profit.Make no money pay no tax..simple..or have I misunderstood ?
ops.....!

i'm the one misunderstood it. many apologies.....! hehe!

btw, is it nett or gross profit? then need to calculate interest, legal fees, stamp duty, etc?