RPGT makes a godsend for the Malaysian residential real estate market

PETALING JAYA: As part of Budget 2022, Malaysian citizens and permanent residents will benefit from the elimination of the Real Estate Gains Tax (RPGT) on the disposal of any residential property in the sixth year of ownership and beyond.

“When it comes to commercial properties or corporate owned properties, they are still subject to RPGT payment at the 10% government imposed rate,” said Chloe Lim Yen Hwa, Founder of Chloe Lim & Co. Ownership.

She said that since the changes to the RPGT as part of the 2022 budget come into effect on January 1, 2022, any sale and purchase agreements that are signed and dated before December 31, 2021 will not be affected.

“To date, the Real Estate Gains Tax Exemption Order 2020 (PU (A) 218) remains in effect until December 31, 2021. We hope that the announcement of RPGT in the 2022 budget will boost and stimulate sales in the real estate market in 2022. “

Regarding legitimate ways to reduce RPGT from January 1, 2022, Carmen Leong Jia Wen of Chloe Lim & Co said Malaysian citizens or permanent residents can apply for a 10% profit exemption or RM 10,000 per transaction, whichever is greater, under multiple conditions.

“The first is a transfer of property out of love and affection between husband and wife, parent and children or grandparents and grandchildren. This exemption does not apply to transfers between siblings.

“Second, one can opt for the lifetime exemption under paragraph 9 of Schedule 3 of the Real Estate Gains Tax Act 1976 for the transfer of a single private residence,” he said. she declared.

Leong said homeowners are allowed to deduct incidental costs incurred from the RPGT attributable to the transfer of properties, such as legal fees, accounting fees, surveyor fees, real estate commission fees, administrative fees. , renovation costs and repair costs.

“Homeowners must retain all original receipts in English or Malay for the qualifying claim for losses incurred in the acquisition until the properties are transferred. In addition, an owner can offset qualifying losses incurred in a single transaction against another divestiture transaction as long as both transactions fall within the same year, ”she said.

RPGT Handbook co-author and TraTax partner Thenesh Kannaa said the abolition of RPGT for the sale of properties after five years of ownership is welcomed by tax advisers as likely to dampen speculation.

“It is hoped that the current rate of 10% RPGT on companies and foreign investors for the same holding period of more than five years would also be taken into account by the government, in which, the rate was 5% before 2019, “he said. Ownership.

Meanwhile, Thenesh said removing the proposed foreign income exemption in Budget 2022 could impact the return on investment for foreign properties.

“Malaysians are advised to keep an eye on the details of the finance bill to be tabled and seek professional tax advice regarding gains from foreign investment. For example, depending on the provisions of the finance bill, some investors may find it beneficial to remit all foreign income to Malaysia by December 2021 to avoid any potential tax on repatriation after January 1, 2022. It depends a lot part of the legal provisions in force. the finance bill and its implications can be complex in many situations, ”he said.

Penny D. Jackson