HOW GST WILL IMPACT HOME PRICES AND PROPERTY MARKET?

INTRODUCTION There is a new tax to be implemented from April

15 in Malaysia

The announcement of this tax was made by the Prime Minister when announcing the annual Malaysia’s budget.

The interesting things was the introduction of a new tax, GST

The new tax is in some ways similar and in other words different to the old tax system

The old tax system which is the Sales Tax is application on existing property.

The similarity between the old and the new system is that both don’t tax residential or home property.

Yes, you will not be ask to pay extra on the purchase of a home or residential property.

The difference that is important to note here is that in the old tax system, only the goods that come under the category of Secondary Rated, are taxed.

And the tax rate that is applied is 5%

This category don not include the basic materials such as brick and tiles.

As for the new system everything thing taxed, every material is taxed

Not only that but the tax rate is also higher, that is 6%

This makes the new tax system an extra burden especially on developers

The good point is that most of the burden is borne by the developers

But the sad part is that the developer will try to pass down the burden on customers

This means that there will be a rise in property prices

CONCLUSION

• Commercial property prices will rise more as compare to home or residential property.

• Developer, and not the final customer bears the extra tax cost. However, developers will try extracting that cost in form of high property prices.

• The secondary home market should see a knock on effect in prices

RESOURCES:

http://loanstreet.com.my/learning-centre/How-GST-Will-Impact-Home-Prices-&-The-Property-Market

http://www.imoney.my/home-loan