Analysts say RPGT hike won’t significantly affect speculation

The five percent increase in the real property gains tax (RPGT) under Budget 2013 will not significantly deter property speculation, but it will be the first step to address the problem, according to property analysts.

They explained that that if the previous RPGT tax structure - a sliding scale from 30 percent to zero percent - was re-implemented, it would further dampen the property market.

Nor Zahidi Alias, Chief Economist at Malaysian Rating Corp Bhd (MARC), said the measures taken by the government under Budget 2013 were the first step in curbing speculation.

However, he calls on the government to increase to RPGT rate, especially for properties sold after three years, because speculative selling usually happens after 24 months.

James Tan, Associate Director at Raine & Horne International Zaki & Partners, concurs that the modified RPGT would likely have little impact on property speculation, as "most speculation takes place after the certificate of compliance is issued and the present rate of 10 percent should be raised to 15 percent."

Meanwhile, the 15 percent RPGT for properties disposed within two to five years from date of purchase will not likely affect the Malaysia's housing sector, said Housing and Local Government Minister Datuk Seri Chor Chee Heung.

Nonetheless, it can deter property speculation.

"The five percent increase in property tax is not high for genuine house buyers. Property speculators who want to make quick profit will be more cautious as they will have to 15 percent tax," added Chor.

Under Budget 2013, PM Najib proposed a 15 percent RPGT for properties disposed within two to five years from date of purchase, while a 10 RPGT for those sold within three to five years.

However, RGPT is not applicable to properties sold after five years of ownership and those that are sold once in a lifetime. Likewise, the tax is not applicable to property transactions between husband and wife, parents and children, grandparents and grandchildren.

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