KUALA LUMPUR – It is inappropriate to introduce the inheritance tax now despite the need for the government to widen its tax base to raise revenue as its implementation will further dampen the property market, a real estate industry association said.
The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) said if at all the inheritance tax were recommended in the 2019 Budget, the minimum threshold should be RM10 million and the inheritance rate at five per cent of RM10 million and above.
It said it understood that the government was toiling with the idea of imposing taxes like the inheritance tax and real property gains tax to tide over the shortfall of revenue from the withdrawal of the goods and services tax and the introduction of the sales and services tax, as well as to lessen its debts and liabilities of RM1.087 trillion.
“However, in view of the current downside of the property cycle, the tax, if implemented, would further dampen the property market and it is inappropriate to introduce it during this period,” it said in a statement.
As for the real property gains tax, PEPS said although there was no evidence of the speculation given, the market has slowed down for the last two years.
Hence, PEPS recommends that the current real property tax structure (last revised in 2015) to be maintained until the property market stabilises.
It added in the 2018 Budget, a proposal to increase stamp duty rate from three per cent to four per cent for properties more than RM1 million, which was supposed to be effective on Jan 1, 2018, was postponed.
“For the 2019 Budget, as the property market has not recovered, we recommend that the four per cent stamp duty rate for properties priced more than RM1 million to be postponed for another year.”
“As of Jan 1, 2017, the government had exempted 100 per cent property stamp duty for first-time home buyer for their first property up to RM300,000.”
“This exemption expires on Dec 31, 2018. PEPS hopes the government will increase the limit of 100 per cent stamp duty exemption to properties priced up to RM500,000 to facilitate and increase demand for properties below RM500,000,” it said.