THE real property gains tax (RPGT) announced in Budget 2019 may reduce property supply in the coming year.

According to the budget, the tax will be increased to 5% from the current 0% for Malaysians, and from 5% to 10% for non-Malaysians.

Property analyst Faizul Ridzuan said there will be a decrease in the number of people seeking to sell properties as they do not want to be charged RPGT.

“They might want to wait a couple more years, or when a new budget that is more investor-friendly is tabled,” he told The Malaysian Insight.

While it is “a good policy”, he said, it will impact property supply nationwide.

“This means the supply of units for sale may decrease, because if they sell now, there will be a ‘penalty’,” said the founder of FAR Capital Sdn Bhd.

Malaysian Institute of Architects council member Mustapha Kamal Zulkarnain said RPGT will “definitely” affect local property sellers.

He said the tax should be charged only to foreigners, and at a 15% rate.

“The local property market is at a low. People will think twice before selling at a lower price. Because of this, there won’t be transactions.”

However, the Real Estate and Housing Developers’ Association’s Penang chairman, Jerry Chan, said while any increase in taxes is not welcome, those who intend to sell their properties should not mind a small tax hike.

“The 5% RPGT (hike) is not a deal-breaker for locals and foreigners intending to buy properties.

“Any increase in taxes is never welcome, but it’s better to make money and pay a bit of tax than not make profit at all.”

Finance Minister Lim Guan Eng had said the tax would be applied to an individual’s first registered property.

RPGT is a tiered tax that ranges from 30% for properties sold within the first year of purchase to 0% after five years. – November 3, 2018.