Thursday 21 June 2012

New launch : The Westside 2 @ Desa ParkCity


The Westside 2 @ Desa ParkCity was having the soft launch in May 2012. This is another condo after The Westside 1 which was sucessfully launched in June 2010.


Summary details of this project :
Land area : 4.2 acres
Total Unit : 338
Sizes : 1389 - 1777sf
Density : 80 units per acre
Developer's Selling Price : RM650psf
Sales achieved : 50%


Webpage :   http://www.desaparkcity.com/index.php?option=com_content&view=article&id=334&Itemid=73


Review :
Location : Good location within Desa Parkcity.
Design : There is not very much different from other condos, typical product.
Price : The pricing is at average condo prices, other projects in Kota Damansara, Subang, Uptown and Mont Kiara is selling way above this project.
My Notes : This was launched in a soften market condition. With a slower and cautious market situation, the sales within a month from the launch is quite impressive compared to other projects launched at the same time.

Friday 15 June 2012

Real Property gain Tax (RPGT) on Budget 2012

Malaysia Government proposed in Budget 2012 that the RPGT on properties held and disposed of within two years be raised from 5% to 10%, 5% tax to be maintained for properties disposed after three to five years and no tax for properties disposed after the fifth year.

Meanwhile, the Government has provided exemption for following:-
  1. Disposal of a residential property once in a lifetime.
  2. Transfer as gifts between parent and child, husband and wife, grandparent and grandchild; (No exemption for transfer between sibling) and
  3. Exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, for each disposal of a property by an individual.

Example to illustrate calculation of Real Property Gains Tax (RPGT) payable: Mr.X purchased a property on year 2006 at RM100,000.00 and sold after or on Jan 1 2010 at RM200,000.00 (within five years of the date of purchase). He made RM100,000.00 from the transaction and the gains are subject to 5% RPGT.
RPGT Calculation:
RM100,000 (Property Gains) - RM10,000 (Waived Exemption) = RM90,000 (Taxable Gains)
RM90,000 (Taxable Gains) x 5% (RPGT Rate) = RM4500 (RPGT Chargeable)

Effective January 1, 2012, property owners and investors who dispose off their property in Malaysia within five years will be subject to the revised RPGT rate on taxable capital gains for sale and purchase agreements signed on or after that date.

Basis Of Taxation
The chargeable gains arising from the disposal of any land situated in Malaysia and any interest, option or other right in or over such land or the disposal of shares in a 'real property company' is subject to Real Property Gains Tax.

Disposer's Responsibilities        
The disposer of a real property has to submit the following within 30 days from the date of disposal of the asset:
  1. Completed Form CKHT 1;
  2. Copies of stamped Sale and Purchase Agreement or Form 14A (memorandum of transfer) to prove the acquisition and disposal of the asset;
  3. Copy of grant/title deed (if any);
  4. Copies of bills and receipts for expenses claimed. (in case of companies or non-citizen and non-permanent resident individuals, details not required if asset is disposed in the sixth or subsequent year from the date of acquisition).

Acquirer's Responsibilities        
An acquirer has to submit the following within 30 days from the date of disposal of the asset:
  1. Completed CKHT 2 forms;
  2. Copy of stamped Sale and Purchase Agreement or Form 14A (memorandum of transfer) to prove the acquisition;
  3. Copy of grant/title deed (if any).
Acquirer (or his solicitor) is also required to retain the whole of the consideration monies or a sum not exceeding five percent (5%) of the total value of the consideration whichever is the lower, until he receives clearance (Form CKHT 4 or CKHT 5) from the Inland Revenue Board.
Exemptions Available For Real Property Gains Tax (RPGT)
  1. A gain arising on disposal prior to 7 November 1975, the date of coming into force of the RPGT Act 1976.
  2. An amount of RM5,000 or 10% of the chargeable gain, whichever is greater, for each disposal of a property by an individual.
  3. A gain accruing to the Government, a State Government or a local authority.
  4. A once in a lifetime exemption on a gain accruing to an individual who is a citizen or a permanent resident or to a husband and wife in respect of the disposal of two private residence (each for husband and wife as amended in Budget 2005).
  5. A gain equal to the amount of estate duty payable where the disposer is compelled to dispose the property in order to pay the estate duty.
A No Loss And No Gain Situation
Applicable only to companies (as defined in the RPGT Act 1976) for the following situations:-
  1. Transfer of asset between companies in the same group to bring about greater efficiency in operation for a consideration consisting of not less than 75% syer in the transferee company and the balance of a money payment.
  2. Transfer of asset between any companies for any consideration in any scheme of reorganisation, reconstruction or amalgamation whereby the transferee company is being restructured to implement any such scheme in compliance with Government policy on capital participation in industry.
  3. Distribution of asset by a liquidator of a company and the liquidation of the company was made under a scheme of reorganisation, reconstruction or amalgamation whereby the transferee company is being restructured to implement any such scheme in compliance with Government policy on capital participation in industry.

Several Transactions Where Disposal Price Is Deemed Equal To Acquisition Price:
  1. Transfer of assets between spouses.
  2. Gifts made to the Government, State Government, local authority or a charity exempt from income tax.
  3. Disposal of an asset as a result of a compulsory acquisition under any law.
  4. Disposal of an asset by a person to an Islamic Bank under a scheme where that person is financed by such bank in accordance with the Syariah.
Rates Of Tax (Real Property Gains Tax)
The above rates apply for disposals on or after 27 October 1995 and has been revised to 5% flat with effective from Jan 1 2010. An individual who is not a citizen and not a permanent resident is subject to the following rates:-

These rates apply for disposals on or after 17 Oktober 1997.

EPF / KWSP withdrawal for second home

Effective from 2nd January 2001, applicants can also withdraw from Account II to purchase or build their second house on condition that the first house, which was funded from their EPF savings, has been sold.
Applicants are required to submit documentation of the sale of property such as:
  • Memorandum of Transfer (KTN 14A); or
  • Title Deed under purchaser's name; or
  • Deed of Assignment; or
  • Loan Agreement cum Assignment.
If the house purchased or built before 2nd January 2001, applicants can only withdraw to reduce or redeem their housing loan only.

EPF / KWSP withdrawal to reduce / redeem housing loan

This scheme allows applicants to withdraw from their Account II to reduce or redeem their housing loans. Withdrawals can be made once a year.
Applicants may apply under this scheme if: -
  • There is an outstanding balance of loan of purchasing a house or shop house with a dwelling unit;
  • Applicants who have refinanced their said house are subjected to withdraw the amount of the original housing loan; and
  • Applicants who have not attained the age of 55 from the date of application received by the EPF.
  • Application can be made ONCE A YEAR from the previous housing loan withdrawal date.
Applicants do not qualify under this scheme if: -
  • The purpose of withdrawal is for renovation, repair or for extensions of the existing house.
  • Applicants have mortgaged the house to acquire finance for use other than purchasing or building a house.
  • The original housing loan balance is fully settled.
Amount eligible for withdrawal: Applicants can withdraw their savings under this scheme shown below or whichever is lower:
For individual application
  • Total outstanding balance of the loan; or
  • Balance amount in Account II.
For joint application
  • Total outstanding balance of the loan, or
  • Balance amount in Account II for both applications.
Under joint application, EPF will process the application of the first purchaser. If the amount is insufficient, EPF will proceed to process the second purchaser.
How to apply
Applicants are allowed to apply for the withdrawal under this scheme once a year from the same account from the date of the first withdrawal. Members are required to submit the KWSP 9C(AHL) form to the EPF.

Purchase a house under EPF / KWSP withdrawal scheme

This scheme allows members to withdraw from their account II to purchase or build a house or shop house with a dwelling unit.

Amount eligible to withdraw
Members can withdraw their savings under this scheme as below, whichever is lower:
The difference between the price of the house and the housing loan with an additional 10% of the house, or  The balance amount in account II.

To apply, applicants are required to submit the KWSP 9C (AHL) form together with the necessary supporting documents.

Thursday 14 June 2012

How a foreigner can invest in Property in Malaysia

All property acquisitions by foreign interest that do not require the approval of FIC but falls under the purview of relevant Ministries and / or government departments are as follows : -
  1. Acquisition of commercial unit valued at RM500,000 and above
  2. Acquisition of agricultural land valued at RM500,000 and above or at least five acres in area for the following purposes :
    • To undertake agricultural activities on a commercial scale using modern or high technolog
    • To undertake agro-tourism projects
    • To undertake agricultural or agro-based industrial activities for the production of goods for export
  3. Acquisition of industrial land valued at RM500,000 and above
  4. Acquisition of residential units valued at RM250,000 and above. The said minimum threshold will be increased to RM500,000 beginning 1 January 2010
  5. The transfer of property to a foreigner based on family ties is only allowed amount immediate family
Restrictions
Foreign interest is NOT allowed to acquire : -
  1. Residential units valued less than RM250,000 per unit (RM500,000 per unit as of 1 January 2010).
  2. Properties other than residential units valued less than RM500,000 per unit
  3. Residential units under the category of low and low-medium cost as determined by the State Authority
  4. Properties built on Malay Reserve Land
  5. Properties allocated to Bumiputera interest in any property development project as determined by the State Authority

How to calculate return on investment?

A simple question, how to calculate return on investment?

Investment in property may take much time and effort than you may expect. When you find a great deal, you might need to leverage on other people’s money to increase your return of investment.

How to calculate the return of investment?
Generally, there are 2 components of returns, rental yield per annum and capital gain or so-called capital appreciation.

What is rental yield?
Rental yield is the return based on rental income from the property less maintenance expenses incurred versus the total purchase price of the property. There are gross and net rental yield. Gross Rental Yield is rental versus the purchase price before the expenses incurred and so on and so forth. In rules of thumb, the Net Rental Yield is approximately 85% of the Gross Rental Yield.

There is another rental yield called Net Leverage Rental Yield. This means, the financing cost is taken into calculation when rental yield calcualted. The expenses incurred inclusive of finance cost versus the net gain is defined as Leverage Rental Yield.

What determine the property value in Malaysia

What is the main concern of buying a property? Location? Type? Rental Returns? Property Value?

Thinking of this question, we must first ask ourselves what are the investment objectives, namely, target of return, investment time horizon and etc.

Amongst the main determinants of property value include : -
  1. Location – This is to determine there is a demand by the target market for this location. Research on the historical rate of property value appreciation in that particular location for similar property is essential.
  2. Property type and size – residential or commercial each have different target market, dependent on location, attracts different tenant profiles.
  3. Rental returns – Find out how much rent can fetch by researching the rental values of similar properties in the area and determine the cost of owning and maintaining.
  4. Cash flow – evaluate the property’s potential to generate income as against cash outflows. Earliest positive cash flow is excellent.
Always, will property value appreciate is the main consideration when investing in property no matter where.

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