The real Malaysian property gains tax (RPGT) will be scrapped from April 1.
Prime Minister Datuk Seri Abdullah Ahmad Badawi announced this at the Invest Malaysia Conference 2007 today, along with a host of incentives designed to drive the
property market, particularly in Johor where the Iskandar Development Region is taking shape.
A no-RPGT regime means capital gains from real estate investment will not be subject to taxes. Currently, the RPGT reaches as high as 30% for those who cash out of property investments within two years of ownership.
The current RPGT structure was introduced in 1996 to cool the then very hot property market.
While in the past the government had issued temporary waivers to stimulate the market, like during the 1997/98 financial crisis, industry players have been pressing for a permanent removal of the tax.
In an immediate reaction to the RPGT abolishment, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Ng Seing Liong said the move was timely and would certainly boost the sluggish market.
Rehda deputy president Datuk Michael Yam had this to say of the market’s response: “Just look at how the property stocks are reacting … (The Kuala Lumpur Composite Index rose 12.38 points to 1,221.72 while the Property Index closed at 872.57 points, up
22.6).
Yam did not see property prices soaring. The bread-and-butter kind of housing, he pointed out, was in ample supply.
Past president of Rehda Datuk Eddy Chen said a no-RPGT regime would not promote property speculation, adding that a dose of “healthy speculation” was necessary to stir the market.
Immediate past World President of the International Real Estate Federation (Fiabci) Datuk Alan Tong said Malaysia would now be more attractive to foreigners who have lots of choices to consider.
He was excited about the multiplier effects of an expanded property development sector on some 140 property-related industries.
SP Setia Bhd managing director and chief executive officer Tan Sri Liew Kee Sin is all upbeat on the RPGT removal, confident that it would spur more property purchases in a market which has in the past three years, had been dominated by those buying for own use.
Liew is also pleased that the government would, come April, unveil new measures to improve the delivery system of local councils.
Rehda Johor branch chairman and Tanah Sutera Development Sdn Bhd general manager Steven Shum said for the IDR to succeed, policies and procedures – such as the Bumiputra quota requirements - needed to be reviewed.
Crescendo Corporation Bhd’s Gooi Seong Lim said the residential sector would be the last to feel the impact of the RPGT removal, after the commercial and industrial sectors.
Low Fatt Onn, director of Property consultants DTZ Singapore sees Singapore-based funds to step up its interest in Malaysia.