PETALING JAYA: The National House Buyers Association (HBA) is unhappy with the government’s revised tax rate on profits in the sale of properties, while a property expert says it is a pointless exercise.
HBA secretary-general Chang Kim Loong said taxing profits on the sale of properties beyond five years reflected badly on Pakatan Harapan, noting that the previous Barisan Nasional government did not impose such a tax.
Finance Minister Lim Guan Eng, in tabling Budget 2019 yesterday, said the government was revising the tax rate for gains in the sale of properties after five years.
The government will impose a 5% real property gains tax (RPGT) on all Malaysians and raise the tax by 5% for foreigners to 10%.
At present, it is a tiered tax that ranges from 30% for properties that are sold within the first year of purchase to 0% after five full years of ownership.
However, those who are selling off their properties below RM200,000 need not pay RPGT.
Chang said: “We had called on the government not to change the RPGT rate for the first two properties and to only increase the RPGT rate for the third and subsequent property.
“By charging an RPGT rate for people who have held properties for over five years or more, the government is effectively imposing ‘tax on inflation’ and this will punish genuine long-term investors.”
He urged the government to reconsider this decision.
Meanwhile, Ernest Cheong, a chartered property surveyor of 40 years, said the government’s revised tax rate on profits on the sale of properties would not make any difference in the current economic situation.
He said most people did not gain any profit in selling off their houses.
“In reality, RPGT is academic. If a person bought a house around 2014 and sells it off today, he may lose money from the sale,” he told FMT.
Cheong asked how the government would collect property-related taxes when the property market was considered “dead”.
He also asked whether those who sold their properties before the five year period would have to pay 5% tax.
“Does this mean they (owners) are exempted from RPGT or they have to pay? The minister has to be clear about the tax on those selling off properties in less than five years,” he said.
Penang-based property developer Jerry Chan said the new rates would not deter the people from selling off their properties.
He said that the 5% would not be a “deal breaker” in the property market.
“I think we can live with it (the taxes). It is not something that is going to deter investments in the long term,” he said, adding, as developers, they understood the need for the government to raise revenue to settle the country’s debt.