There are a number of important property updates that foreigners and MM2H participants should take note of.
The first is in regards of property taxes for foreigners and MM2H participants in Penang, which was actually released in July 2012.
Penang used to allow those with the Malaysia My Second Home visas to buy property (in Penang) priced over RM250, 000. But the latest update from the Penang State Government (as of 1 July 2012) is that MM2H participants can only purchase a residential property at a minimum price of RM500, 000 (limited to 2 units only).
However, for foreigners there is no limit (in units) in purchasing a landed property on the Island (minimum RM2 million) and in Seberang Perai, the mainland (minimum RM1 million). For stratified properties, it is a minimum of RM1 million for Seberang Perai and on the Island.
Sale of property in Penang is only allowed after 3 years of signing the sale and purchase (S&P) agreement. Any stamping of S&P agreement made after 1 July 2012 is subjected to the changes mentioned above.
The second is based on the 2013 Malaysia Budget which was tabled in parliament on 28 September 2012 by Prime Minister Datuk Seri Najib, who is also the Minister of Finance in Malaysia. The new Budget contained a slight increase for property gains tax.
Based on the Budget, limited liability partnerships will fall within the real property gains tax (RPGT) net, as persons chargeable to tax under the RPGT legislation, in line with the introduction of measures for limited liability partnerships under the Income Tax Act.
For property gains tax in Malaysia, from 1 January 2013, the effective tax rate on disposal of real property within the third to fifth year of acquisition is revised from the current 5% to 10%. No tax is imposed on profits gained if the property is disposed of after 6 or more years of ownership.
Also, based on the Budget the tax was increased to 15% if the property is sold in the first two years after purchase.
Read more: A Review of Malaysia’s 2013 Budget
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