Malaysia urges government to cancel new property tax

Property professionals in Malaysia are urging the government to cancel its new property tax system.

The new process, introduced in 2012, charges developers 10 per cent gains tax if they sell a property within two years of the initial purchase. This levy is reduced to 2 per cent for properties held between two and five years, while those who sell after owning for over five years are exempt. The old tax laws charged a flat 5 per cent tax for any property sold within five years.

The new legislation was designed to reduce speculation within the market, but the Real Estate and Housing Developers Association (REDHA) and National House Buyers Association have both said that the measures are having no impact. As a result, they have advised the authorities to revert to the old method of taxation.

"Under the current market conditions such as the softening market and early signs of better growth of the economy ahead and the uncertainties of the United States and eurozone economy, we urge the Government not to interfere with the existing policies which are business friendly," Rehda told StarBiz

"Developers typically need two years to complete landed properties and three years to complete stratified properties. This would mean that speculators could buy properties from developers, flip on completion and in effect pay the same 5% RPGT rate that was before Budget 2012," added National House Buyers Association secretary-general Chang Kim Loong.