Players Hail Capital Gains Tax Decision
ABOLISHING the real property gains tax (RPGT) will definitely help kick start the sluggish property market in Malaysia.
This is the consensus of industry players as well as many house buyers who welcomed the news.
The RPGT has long been seen as an “unnecessary” obstacle to the nation’s attempt to attract more foreign direct investment, particularly in our property sector.
Although the tax might discourage rampant speculation in an over-heated economy, it is felt that having the RPGT in a not so robust economy would only add to the cost of purchasing property.
As it is purchasers have to pay stamp duty that can amount to quite a large sum for upmarket properties like bungalows, semi-detached houses, villas and condominiums in prime locations.
Doing away with the RPGT will spur foreigners to snap up our property as they would not have to worry about having to pay a flat 30% RPGT when they sell it off in say, one to five years’ time.
In fact, many estate agents see more property transactions taking place with RPGT out of the way, as people will not be so reluctant to dispose of their property out of fear of having to pay RPGT and bearing a loss should they sell their property at a low price or have their profits trimmed.
There are also those who feel that doing away with the RPGT will not have a big impact, as generally people do not dispose of their property within the first five years.
It is unlike during a property and stock market boom where there is a lot of liquidity and speculators are having a field day.
Today, that scenario of “flash sales” seems quite remote.
With so many high-end residential properties being launched and coming on stream in the country, there are even fears that there might be an overhang of such properties, at least in the near term.
As it is, many high-end developments in the Klang Valley have not been fully sold even after their completion. One can see developers advertising the same projects even after buyers have moved into their units.
This is especially true for high-end condominiums not only in the city centre but also in the secondary areas.
Although there was a slight rebound in market sentiment early this year following the stock market's bull run, the overall mood is still largely one of “wait and see”.
Developers generally would also like to see the abolishment of stamp duties permanently, as this would make the cost of buying property more affordable.
What worries industry players and the home-buying public are the constant ad-hoc changes in policies that not only confuse investors and homebuyers but may actually back-fire and cause the property market to crash if the goodies given are suddenly taken away.
Source :The Star 23/03/2007 Close Window