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Analysts,players laud RPGT move Print E-mail

The tax amendment might spur buying interest

PETALING JAYA: The amendment to the real property gains tax (RPGT), which will be reimposed next year at 5% but now applicable only to transactions involving properties sold within five years from their purchase, is “a perfect Christmas gift” which will lift the local property market, analysts said.

Prime Minister Datuk Seri Najib Tun Razak announced the amendment to the RPGT on Wednesday, where the 5% tax would now only be imposed on properties sold within five years of the date of purchase.

The Government had previously wanted to impose the RPGT across the board, irrespective of the number of years of ownership, as announced in Budget 2010.

The premier had said the decision would cause the Government to lose about RM200mil in revenue, but the move was made following appeals from the Federation of Chinese Associations of Malaysia (Hua Zong) and the business sector.

The Government wanted to see stronger growth in the property sector next year in making the amendment, according to Najib.

Kenanga Research said the move to limit the RPGT to the five-year ownership ruling was definitely good news, adding that it would spare non-speculators from being penalised.

It noted that this would allow those holding properties for more than five years to sell their homes and recognise 100% of the capital gains.

“In turn, this spurs genuine property activities, which are supported by the country’s fundamentals, as opposed to speculative activities,” the research house said in a report.

Analyst Mervin Chow of OSK Research agrees that the amendment to the RPGT has ensured a much fairer policy as the 11th hour change in policy will benefit long-term property investors.

“(The amendment to the RPGT) is reflective of the main objective of having the RPGT in the first place, which is to rein in excessive speculation in the property sector,” he said.

ECM Libra Investment Research said the move was a “perfect Christmas gift for the property sector.”

“This will provide a much needed relief for the property sector as it sends an affirmative signal that the Government will adopt an accommodative stance to support growth in the property sector,” it said.

With the relaxation of the RPGT, ECM said buying interest might pick up, especially among those looking to upgrade their property ownship.

Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Ng Seing Liong said the property market would benefit from the amendment, and that it would have “a very significant stimulating effect” on property investments by both foreign and local investors.

“This can be acknowledged by the fact that the market reacted positively to the RPGT waiver in 2007 where increased sales and enquires were recorded,” Bernama quoted Ng as saying.

Propery player Naza TTDI also supported the amendment to the RPGT.

“With this new RPGT measure, we are confident the market will respond positively and this will help propel Malaysia’s property market among the other countries in the region,” Bernard Yong, a senior marketing manager with Naza TTDI, told StarBiz in an email reply.

Deloitte Malaysia country tax leader Ronnie Lim said the Government had done the right thing in imposing the RGPT only on properties sold within five years from the date of purchase.

“Prices of some property development companies’ shares have risen as the market showed its approval,” he noted in a statement.

But not everyone is excited about the RPGT amendment, with Regroup Associates Sdn Bhd executive director Paul Khong saying if there were any impact at all, it would be quite nominal. He noted that the move would basically encourage long-term investments in the sector.

“The RPGT has already served its original purpose of curbing speculation by holding to a five-year period. This is a long time and many short-term investors will continue to shy away from the market accordingly or weigh this into their purchase consideration,” he told StarBiz in an email reply.

The re-imposition of the RPGT has resulted in “the Malaysian property sector becoming slightly less attractive regionally as investors still have much choice locations to invest their money,” Khong said.

He reckoned that investors, especially foreign investors, would like to see a longer term and more consistent property policy, adding that recent policy changes pertaining to the property sector were short term and too sudden.

“Ever since Budget 2010 was announced, some property owners had been working feverishly to dispose of properties before Jan 1, 2010, the date when (the original) RPGT would be re-activated with tax levied on gains on disposals irrespective of the period of ownership,” he said.

A property buyer, who declined to be named, agreed, saying he had reaped the benefit of the RPGT before it was amended, as sellers were willing to sell at lower prices on the assumption that the RPGT would be implemented in full.

“I managed to buy an old aparment for RM160,000 although the market price was RM180,000 because the seller wanted to sell it fast, before the reimposition of the (original) RPGT on Jan 1,” he said.