Prime Minister of Malaysia, Dato’ Sri Mohd Najib bin Tun Abdul Razak, has just announced that the Real Property Gains Tax (RPGT) will be increased effectively on the 1st of January 2003, to curb domestic property market speculation.
Property held and sold within first 2 years of purchase, will be incurred a 15% Real Property Gains Tax. For property held and sold within 3-5 years, there will be a 10% RPGT. Any properties sold after the fifth year will not have any RPGT incurred.
The new RPGT is without a doubt, higher than the current RPGT. Currently, RPGT for properties sold within first two years is 10%, and 3-5 years is 5%.
Many believed this increase in RPGT will not have a lot of impact on the property market, which continues to rise. This move is more towards reducing the deficit of Malaysia government.
Many investors buying newly-launched properties would have already avoided the 15% RPGT, as the constructions of new properties usually take about 2 years.
Speculative activities will still continue. It is good news for investors, bad news for first home buyers.