More punitive taxes will kick-in then to curb speculation
REAL ESTATE agents have been swamped with viewings in the last few weeks of the year ahead of more punitive property taxes which will kick-in come Jan 1.
While many were enjoying turkey and minced pies, Monica K was busy with clients. "I spent the whole of Christmas day at viewings," she half-groan-ed. Piped in her colleague, J K: "We have also been working a lot of Sundays, too."
Specialising in the popular areas of Mont Kiara, Bangsar, Damansara Heights and Desa Park City, the agency has seen a number of sellers in certain developments wanting to cash out after the government announced at the end of October that higher real property gains tax (RPGT) would apply from Jan 1 to curb speculation and sky-rocketing home prices.
Ms Monica K said that most of the sellers of high-rise and landed properties are in their 30s and looking to on-sell after holding their properties for two to three years. This is also the period when owners who bought under the now-banned Developer Interest Bearing Scheme have to shoulder the loan repayments themselves upon the unit's completion.
"My client still made about RM50,000 (S$19,240) net on a RM500,000 property," said an agent Kenneth, who was very busy in the first two weeks of December. He recounted a viewing where the buyer arrived at 11pm rather than the initial appointed time of 5pm, but made up for his tardiness by agreeing to buy on the spot.
"We had to call the owner although it was late since he (the owner) wanted to rush the sale and we had to get the agreement signed and stamped before January."
An RPGT rate of 30 per cent applies to gains on disposals in the first to third year, 20 per cent in the fourth and 15 per cent in the fifth year, after which there is no tax. For foreigners, the rate is 30 per cent for five years, and 5 per cent thereafter.
Previously, the prevailing rate was 15 per cent for the first and second year, and 10 per cent for the third to fifth year.
Another agent Bee said that she only had one viewing on Christmas day as those intending to sell had done so prior to Budget 2014 because they had anticipated the higher RPGT.
Agents say that some property developments had attracted more speculators who wanted a quick sale - especially if their properties are of a larger size - while there are projects where the owners have stronger holding power and do not mind keeping it for a while more.
Property players reckon that the market is likely to soften next year - particularly the earlier part - because of the new cooling measures. But they do not see prices falling because electricity, toll, labour, material and other costs are rising fast.
As KH Chen, managing director of Landserve Sdn Bhd, told The Edge over the weekend: ". . . Such measures will not deter genuine homebuyers and investors with a long-term view. We have clients making transactions in December, some of which are at record prices. Genuine property investors may be more cautious, but they will never leave the property market."
Source from Business Times