Rethink Property Gains Tax House Buyers Urge Govt

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Exemptions from the property tax are only given for properties priced below RM200,000. (Bernama pic)PETALING JAYA: The federal government has been urged to review its policy on the real property gains tax (RPGT) imposed on the sale of real estate, and to consider a sliding-scale tax rate
National House Buyers Association secretary-general Chang Kim Loong said real estate was a long-term financial investment to hedge against inflation and provide financial security in a person’s later years
He said the current property tax was akin to “a tax on inflation” where genuine long-term investors are punished
In the past, no tax was imposed if a property was sold after five years, but the policy was changed in the 2019 budget
Exemptions are only given for properties priced under RM200,000. For Malaysians and permanent residents, a one-off exemption is given for the sale of one property during their lifetime
Chang suggested a sliding-scale tax rate. “If you dispose of your property within three years, you pay a 35% real property gains tax, in the fourth year, 25%, in the fifth year 20% and nothing after the fifth year
Melaka-based developer Anthony Adam Cho said the property tax was a dampener on the property market
“For the first half of the year, property sales have been okay. In Melaka, the Home Ownership Campaign registered the sale of 600 units of the over 5,000 unsold units. Most of the homes sold were priced below RM400,000.”However, economist Carmelo Ferlito said similar property policies were in place in other parts of the world and were unlikely to affect home owners’ decisions to sell their property
Ferlito said Italy, his native country, had levied a tax on profits from the sale of homes regardless of how long they had been held
However, he contended that the tax could result in an artificial increase in the price of property. A seller raises his price in order to achieve a certain profit after taking into account how much property gains tax he would pay, he said
“What is more likely, though, is that this could lead to sellers undervaluing the prices of their homes so they pay less tax and then reach an arrangement with buyers to accept under-the-table money for the true value of the home.”On whether the government should review the policy, Ferlito said it depended on Putrajaya’s aim
He said if the government wanted to raise money, this was one way to do so without burdening the people, but if the aim was to increase home ownership, then there would be no benefit to continuing with a perpetual RPGT. - FMT

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