Today our Prime Minister tabled the Malaysia Budget 2012 and announced from 1st Jan 2012 the Real Property Gain Tax will be increased to 10% for any property disposed within two years from the date of acquisition. For properties held and disposed within a period exceeding two year but not more than five years, the property tax remains as 5%, while properties held and disposed after five years are not subject to any real property gain tax.
My personal opinion the marginal increase for the property tax may not give a strong impact against the property speculation in Malaysia. Most of the property investors buying their investment properties directly from the Developers, and as we know the expected completion of each project may takes 24 months to 36 months, in this respect as a investor who dispose the newly completed property may not feel any pain at all, at the end of the day the property investor only have to pay a marginal 5% on property tax. To some extend the seller may add the 5% property tax value to the selling price, hence the purchaser has to absorb the bill on behalf of the seller, this kind of situation indirectly could affect the property price going higher at the shortest time.
So, what is the best solution to curb this “unhealthy property market trend”? The best and most effective way is the Government should implement the old rules i.e. imposed 30% property gain tax for the first 2 years. Unfortunately our government is not ready to go for that implementation due to economy factors.
Judging from this budget announcement, the only way to prevent the property prices keep rising, I think Bank Negara should step in and give further instruction to all the commercial banks on the new mortgage lending rule, only allow borrowers taking up for second mortgage up to 70% of the appraisal value. If this measure really implemented by all the financial institutions, I believe the properties prices may consolidate and drop in value, you will see a huge supply of properties for sale in the next one to two years.