The Malaysian property sector is poised for a new level of growth and profitability, given the abolishment of taxes on profits derived from disposal of properties come 1 April 2007, sweetened further by a host of relaxation in homeownership rules and incentives for foreigners investing in the country.
Real property gains tax (RPGT) abolished from 1 April 2007
The abolishment of RPGT for all property owners - both Malaysians and foreigners, is expected to create demand from not only locals but also foreigners.
For foreigners, the removal of RPGT (a flat rate of 30% on profits derived from disposal of properties within 5 years from the purchase date and 5% in the 6th year and thereafter) is an added attraction to Malaysia's undervalued properties compared to its immediate neighbours.
Foreign Investment Committee (FIC) new ruling
Foreign acquisitions of residential properties priced above RM250,000 per unit no longer require approval from the FIC.
No conditions in terms of usage or limit on the number of properties purchased.
Liberalisation of foreign exchange administration policies by Bank Negara Malaysia
With effect from 1 April 2007, there will be no limit on the number of residential property loans obtained by foreigners. Under the previous policy, foreigners were allowed to obtain a maximum of 3 property loans to finance the purchase of properties in Malaysia.
Malaysia : My Second Home Programme (MM2H) new ruling
A long term Social Visit Pass with Multiple Entry Visa for a duration of 10 years - this is the longest visa period issued by the Immigration Department.
Fixed deposit requirement. Participants aged below 50 need to place a deposit of RM300,000. After a period of one year, participants can withdraw up to RM240,000 for approved expenses relating to house purchase, education for children in Malaysia and medical purposes.
Foreign spouses : 5-fold extension period for passport endorsement
Foreign spouses of Malaysians can now stay for 5 years without the annual endorsement of passports.
As the Malaysian government continues to seek greater foreign investment for its property sector, clearly, the biggest beneficiaries will be the high-end exclusive residential units. An uptake is anticipated in the condominium market, a favoured investment amongst foreigners in the past due to very attractive yields in rental and capital appreciation.
