Sunday October 17, 2010
Perks for first-time house buyers
The PricewaterhouseCoopers team answers questions from readers on the perks for first-time property buyers, stamp duties and service tax.
> I hear that some incentives were announced to encourage first-time residential property buyers. Please elaborate.
Yes, partial stamp duty exemptions were proposed to encourage ownership of the first residential property not exceeding RM350,000 by Malaysian citizens:
• 50% stamp duty exemption on instrument of transfer
• 50% stamp duty exemption on the loan agreement instruments
The PricewaterhouseCoopers team: (Back row, left to right) Cheng Wei Yee (senior consultant), Siti Kamariah Ahmad Subki (senior consultant), Suzanna Kavita SM Vijayapalan (managing consultant), Sherlene Wong Pake Kuan (managing consultant), (front row, left to right) Desmond Goh (managing consultant) and Lorraine Yeoh (executive director)
These proposals are effective for sale and purchase agreements executed between Jan 1, 2011, and Dec 31, 2012.
For example, if Mr A borrowed RM300,000 from a bank to purchase a property of RM350,000, he would only need to pay stamp duties of RM4,750 (see graphic).In addition, for first-time purchasers with household income of less than RM3,000, a “Skim Rumah Pertamaku” will be introduced through Cagamas Berhad. Through this scheme, the purchasers will obtain a 100% loan without having to make the 10% down payment. This is applicable for houses below RM220,000.
> Is there a 50% stamp duty exemption for joint owners (husband and wife) who are both first-time house buyers?
Based on the Budget Speech, the answer would appear to be yes.The “first residential property” means a situation whereby an individual does not own any residential property (or does not own a part of a residential property in the case of joint ownership) in his/her name at the time he/she applies for the 50% stamp duty exemption for residential property priced not exceeding RM350,000.
> Would there be a 50% stamp duty exemption if one of the joint owners (say, brothers) is a first-time house buyer? If so, how would the exemption be calculated for a property that costs RM300,000?
Based on the budget announcement, it is currently unclear how the 50% exemption will be applied in the joint ownership property situation where one of the joint owners is a first-time house buyer and the other is not. It may be that the first-time joint owner could be eligible for the 50% exemption for his share of the property; or both joint owners could be ineligible for the 50% stamp duty exemption since one of the joint owners is not a first-time house buyer. This will need to be further clarified with the Inland Revenue Board.
> Are there any changes in relation to real property gains tax (RPGT) which was a hot topic in Budget 2010? There was a lot of speculation that the RPGT rate could be increased to further curb property speculation.
The 5% RPGT remains unchanged. However, it is proposed in Budget 2011 that any RPGT overpaid may be utilised by the Director-General to set off any tax payable under the Income Tax Act or the Petroleum (Income Tax) Act. Hence, taxpayers can apply to the tax authorities for such set-off.
> Will the abolition of import duties on imported fashion items take effect immediately, post-Jan 1, 2011, or on a date to be announced?
The abolition of import duties will take effect from 4pm on Oct 15, 2010.
> I understand that service tax rate will be increased from 5% to 6%. Will this affect the service tax on my credit cards?
No, the service tax on credit cards and charge cards remains at RM50 for principal cards and RM25 for supplementary cards.
> When will I start paying service tax on my subscription for paid TV?
The 6% service tax will be payable from Jan 1, 2011.
> This is the first of a three-part question-and-answer series provided by PricewaterhouseCoopers on various aspects of Budget 2011. The next two parts will appear in StarBiz tomorrow and Tuesday. E-mail your questions to [email protected].
Perks for first-time house buyers
The PricewaterhouseCoopers team answers questions from readers on the perks for first-time property buyers, stamp duties and service tax.
> I hear that some incentives were announced to encourage first-time residential property buyers. Please elaborate.
Yes, partial stamp duty exemptions were proposed to encourage ownership of the first residential property not exceeding RM350,000 by Malaysian citizens:
• 50% stamp duty exemption on instrument of transfer
• 50% stamp duty exemption on the loan agreement instruments
The PricewaterhouseCoopers team: (Back row, left to right) Cheng Wei Yee (senior consultant), Siti Kamariah Ahmad Subki (senior consultant), Suzanna Kavita SM Vijayapalan (managing consultant), Sherlene Wong Pake Kuan (managing consultant), (front row, left to right) Desmond Goh (managing consultant) and Lorraine Yeoh (executive director)
These proposals are effective for sale and purchase agreements executed between Jan 1, 2011, and Dec 31, 2012.
For example, if Mr A borrowed RM300,000 from a bank to purchase a property of RM350,000, he would only need to pay stamp duties of RM4,750 (see graphic).In addition, for first-time purchasers with household income of less than RM3,000, a “Skim Rumah Pertamaku” will be introduced through Cagamas Berhad. Through this scheme, the purchasers will obtain a 100% loan without having to make the 10% down payment. This is applicable for houses below RM220,000.
> Is there a 50% stamp duty exemption for joint owners (husband and wife) who are both first-time house buyers?
Based on the Budget Speech, the answer would appear to be yes.The “first residential property” means a situation whereby an individual does not own any residential property (or does not own a part of a residential property in the case of joint ownership) in his/her name at the time he/she applies for the 50% stamp duty exemption for residential property priced not exceeding RM350,000.
> Would there be a 50% stamp duty exemption if one of the joint owners (say, brothers) is a first-time house buyer? If so, how would the exemption be calculated for a property that costs RM300,000?
Based on the budget announcement, it is currently unclear how the 50% exemption will be applied in the joint ownership property situation where one of the joint owners is a first-time house buyer and the other is not. It may be that the first-time joint owner could be eligible for the 50% exemption for his share of the property; or both joint owners could be ineligible for the 50% stamp duty exemption since one of the joint owners is not a first-time house buyer. This will need to be further clarified with the Inland Revenue Board.
> Are there any changes in relation to real property gains tax (RPGT) which was a hot topic in Budget 2010? There was a lot of speculation that the RPGT rate could be increased to further curb property speculation.
The 5% RPGT remains unchanged. However, it is proposed in Budget 2011 that any RPGT overpaid may be utilised by the Director-General to set off any tax payable under the Income Tax Act or the Petroleum (Income Tax) Act. Hence, taxpayers can apply to the tax authorities for such set-off.
> Will the abolition of import duties on imported fashion items take effect immediately, post-Jan 1, 2011, or on a date to be announced?
The abolition of import duties will take effect from 4pm on Oct 15, 2010.
> I understand that service tax rate will be increased from 5% to 6%. Will this affect the service tax on my credit cards?
No, the service tax on credit cards and charge cards remains at RM50 for principal cards and RM25 for supplementary cards.
> When will I start paying service tax on my subscription for paid TV?
The 6% service tax will be payable from Jan 1, 2011.
> This is the first of a three-part question-and-answer series provided by PricewaterhouseCoopers on various aspects of Budget 2011. The next two parts will appear in StarBiz tomorrow and Tuesday. E-mail your questions to [email protected].
