The Real Property Gains Act 1976, was passed many years ago and its purpose was to curb extensive property speculation, which pushed prices of properties especially houses, beyond the reach of common folks. In the past few years, speculative gains in property returns, and transactions [and gains] have been made by speculators, at the developer’s offices for instance, for resale within 2 years, some even before houses are issued with certificate of fitness for occupation. As long as there are ‘buyers’, the ‘speculated’ prices become market prices. The activities are especially rampant in areas like Petaling Jaya and Kuala Lumpur.
In a booming economy, speculators normally do make a lot of profits, without even staying in the houses [awaiting completion, if they are buying from developers]. Speculators do get their fingers burnt if they ‘purchased’ 'wrong' properties, perhaps in ‘wrong’ locations from ‘wrong’ developers.
Whether this country is run by whichever type ‘government’, any neglect of an elected government to curb highly active speculation [with abnormal gains] could be very unhealthy to the government and the general population, and certainly could be dangerous to the economy of the country. The property bubble could burst, if not supported, say, by the domestic demand and money from overseas.
However, the Treasury has NOT indicated the full mechanism of the property gains tax as yet except to say that a 5% tax could be levied.
In the 1976 Act, for properties acquired before 1st January 1970, the acquisition date of the property shall be 1st January 1970. And, where, prices are not known, the Treasury will accept valuation, as at that date by any registered valuer for properties acquired earlier than this date. The date of valuation of such properties for acquisition purposes was 1st January 1970.
In the present scenario, it is believed that a new ‘base’ year could be found. Perhaps 1st January 2008? Perhaps January 1st 2009? Those who bought properties in Malaysia under the ‘Malaysia My Second Home’ may see some problems should they wish to dispose their properties now. Their gains could be reduced now. [Tax consultants will have increased business in offering advice].
But have those foreigners be misled that there was no property gains tax? The RPGT has been there, but implementation was ‘suspended’ for several years. [The law apparently has not been repealed.]
Unreal gains in property investment cannot be good for the population, though we must realise that without some amount of speculation, the property market could be dead, which is not healthy as well.Any government of the day has to look at and intervene in abnormal speculation in properties, especially residential dwellings.
Under the RPGT 1976, one is exempted from paying property gains for one house in his or her life, and incidental costs like fees of valuers, estate agents, lawyers in connection with disposal of the asset are allowed by the tax authority.
