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SG Foreign buyers hit by Malaysia budget

Property Here - Friday, October 25, 2013

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The Malaysia 2014 Budget announced on Friday by the country's Prime Minister and Minister of Finance Datuk Seri Najib Tun Razak (pictured) saw significant changes made to property purchases, especially among overseas buyers. 

With effect from 1 January next year, the government will raise the minimum price of property that can be purchased by foreigners to RM1 million (S$394,340) from the previous RM500,000 (S$197,230). 

At the same time, property developers will be prohibited from implementing projects that have features of Developer Interest Bearing Scheme (DIBS), to prevent developers from incorporating interest rates on loans in house prices during the construction period.

Therefore, financial institutions are prohibited from providing final funding for projects involved in the DIBS scheme. 

As for gains on properties disposed within the holding period of up to three years, the real property gains tax (RPGT) rate was increased to 30 percent.

For disposals within the holding period up to four and five years, the rates are increased to 20 percent and 15 percent respectively. 

For disposals made in the sixth and subsequent years, no RPGT is imposed on citizens, whereas companies are taxed at five percent. 

For non-citizens, RPGT is imposed at 30 percent on the gains from properties disposed within the holding period of up to five years and for disposals in the sixth and subsequent years, RPGT is imposed at five percent.