Even though Malaysia’s federal government needs to raise its revenue given its massive debt of RM1.087 trillion, it’s not a good time to impose an inheritance tax as it would negatively impact the property sector, according to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector (PEPS).
“In view of the current downside of the property cycle, if the tax implemented, it would further dampen the property market,” said the industry body in a report by Bernama.
Nonetheless, PEPS said it’s cognisant of Putrajaya’s financial situation and the necessity to increase government revenue, in light of the cancellation of the Goods and Services Tax (GST) and the introduction of the less stringent Sales and Services Tax (SST).
But if the federal government will really implement an inheritance tax in Budget 2019, then PEPS suggests that it should only be applied to properties costing at least RM10 million, with a tax rate of five percent.
Regarding the Real Property Gains Tax (RPGT), it should be maintained until the local real estate sector recovers following a two-year slump. In addition, property speculation has already been controlled.
The industry body also highlighted that the proposal in Budget 2018 to raise the stamp duty from three percent to four percent for homes priced at over RM1 million on 1 January 2018 was deferred.
“For Budget 2019, as the property market has not recovered, we recommend that the four percent stamp duty rate for properties priced over RM1 million be postponed for another year.”
The authorities have also exempted first-timers buying homes costing up to RM300,000 from paying the stamp duty since 1 January 2017, but this exemption will lapse by 31 December 2018.
“PEPS hopes the government will extend the stamp duty exemption to properties priced up to RM500,000 to boost demand for such properties,” it added.
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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