How to pay less tax on Malaysian property
IF YOU own property in Malaysia, it is time you documented all your expenses comprehensively. For that is one simple way of reducing an investor's tax liabilities.
Richard Oon, national tax director of TY Teoh International, shared this tip at the My Paper Advance Series Seminar yesterday, when he spoke on ways in which foreign investors can reduce their tax exposure.
Mr Oon advised the 150-strong audience on what is tax deductible (repairs and maintenance costs) and what is not (renovations which enhance the condition of the property).
He also discussed the imposition of the higher real property gains tax (RPGT) this year, when foreigners will be hit with a rate of 30 per cent if they sell a property within the five years after acquiring it, and 5 per cent thereafter.
But there are ways to get around this. For instance, if an individual spends a lot of time across the Causeway, he can be considered a tax resident, provided he spends more than 182 days a year in the country.
Another way to minimise property taxes is to know which transactions can be classified under income tax.
"Property flippers may find it more beneficial to be taxed under income tax than RPGT," added Mr Oon.
He also advised the audience to buy property before the imposition of the Goods and Services Tax in April next year.
This sentiment was shared by Vincent Tan, Mah Sing Group's head of Singapore office, who spoke about the overall outlook on the property market at the seminar, themed Strategic Game Plan: Buying Property in Malaysia.
"We think prices have not reached their peak and there is still room for growth. Our (Malaysia's) property market is sustainable, with no property bubble," said Mr Tan.
Amy Wong, CB Richard Ellis Malaysia executive vice-president of research and consultancy, focused on the impact the first mass rapid transit system in the Greater KL area, colloquially known as the Klang Valley, would have on property sales.
One of the three lines will connect Sungai Buloh, in the north-west of Kuala Lumpur, with Kajang in the south-east.
"It will increase mobility and will make the suburbs highly accessible. With increased accessibility to these areas, we see that prices in Kajang, Cheras, Sungai Buloh will definitely increase because of this," said Ms Wong.
Beside the nation's capital, another area that was highlighted in the seminar was Penang.
Jason Teoh, director of Henry Butcher Malaysia, Penang, provided the audience with a macroview of the state and how it is an area property investors should consider.
"Penang's property market is relatively strong, given that the state is underpinned by healthy fundamentals such as a young population, low unemployment rate, vibrant local and foreign investments, stable income and bright job opportunities," said Dr Teoh.
A key takeway for many of the audience members during the three-hour session was the tips on taxation by Mr Oon.
"I now know that there are a lot of taxes that can actually be reduced. It will help me to plan when we buy property in Malaysia," said association engineer Lau Teck Seng.