How to purchase property in JB …

Am i eligible to purchase loan?

As a rule of thumb, most house buyers buy houses that cost 1.5 and 2.5 times their annual income. For example a house buyer earning RM40,000 a year would buy a house between RM60,000 and RM100,000. Furthermore, the monthly loan repayment should not exceed about 1/3 of your gross monthly income. In assessing your repayment capability, the financial institution would also take into account your other debt repayments such as car loan, personal loan and credit cards

 

Can I purchase a house under joint names and apply for the housing loan only under my name?
The financial institution will consider such applications on the merits of each case, under the following circumstances:

  • The co-owners are related as husband and wife, and one party is not working and the other party is solely responsible for the loan
  • The co-owners are related as father/mother and children, the parents are old and not working and the children will be responsible for the loan

However, the above is at the financial institution’s discretion and they may also consider other circumstances.

Formula

PSF in MYR x SQFT – Total value in MYR

Down Payment : Total Property Price x 10/ 100  (  10% )

Case study

Now, let us assume you would like to buy a studio unit in this area. The unit is priced at RM350 psf with a size of 500 sq ft.

  • The quantum price will be RM350 x 500 = RM175,000

Let us assume an interest rate of 4.45 percent with 10 percent down payment and 90 percent loan over 30 years.

  • You will need to put down a down payment of RM175,000 x 10/100 = RM17,500

Now, let’s work out your monthly mortgage payment using PropertyGuru’s mortgage calculator.

  • Your monthly mortgage would work out to RM793.36

If we work backwards using the income-to-mortgage ratio: to afford this unit, your gross income must be:

  • Gross income x 30/100 = RM793.36
  • Gross income = RM793.36 x 100/30 = RM2,644.53

 

Why Malaysia Properties are a good Investment Point

It’s good because  investors can earn more money in malaysia properties

  •  ” RPGT” in short for Real property gain taxes, , on the profit gained from the disposal of a property and is payable to the Inland Revenue Board only applicable to a seller.

For example, A bought a piece of property in 2000 at a value of RM500,000. Subsequently, A sold the property to B at the value of RM700,000, gaining RM200,000 from the disposal of the property. The RPGT is calculated for RM200,000.

Here are some frequently asked questions which may be relevant in understanding the concept of RPGT and how it applies to you:

What is the applicable rate?

The effective RPGT rates are as follows:

Date of Disposal Companies Individual (Citizen &
Permanent Resident)
Individual (Non-Citizen)
Within 3 years from the date of acquisition 30% 30% 30%
In the 4th year 20% 20% 30%
In the 5th year 15% 15% 30%
In the 6th year and subsequent year 5% 0% 5%

When do I have to pay RPGT?

As prescribed by law, the purchaser’s solicitors are required to retain 3% of the purchase price from the deposit and remit the same to the Inland Revenue Board within sixty (60) days from the date of the sale and purchase agreement to meet the RPGT payable.

In instances where the consent of the State Authority is required to sell the property to a purchaser and/or charge the property to a financial institution, or a court order for sale is required to dispose of the property, remittance of the 3% of the purchase price may be deferred until such consent or court order for sale is obtained.

What is the consequence of late payment?

Any payment after 60 days may attract a penalty payable by the seller. The penalty is 10% of the amount payable as RPGT.

Am I required to do the documentation on my own?

The seller may opt to file the necessary forms with the Inland Revenue Board individually or seek assistance from the solicitors at a fee prescribed by the Solicitors Remuneration Order 2006.

What if I sell the property at a loss? Am I still required to pay RPGT?

RPGT is only chargeable if there is a profit gained from the disposal of the property. As such, if the disposal price is lower than the acquisition price, there is no profit gained and therefore no RPGT is payable.

Likewise, if the disposal price is equal to the acquisition price, there is neither a chargeable gain nor an allowable loss. As such, no RPGT is payable.

Am I entitled to any deductions?

The RPGT Act 1976 allows certain incidental costs of the acquisition of the property and disposal of the property to be taken into account, such as legal fees for the acquisition and disposal of the property and estate agency fees.

Am I entitled to apply for exemption? Does it matter whether it is residential or commercial property?

Every disposer is entitled to a once in a lifetime exemption. However, this exemption is only applicable for the disposal of a “private residence”. The RPGT Act defines a private residence as a building or part of a building in Malaysia owned by an individual and occupied or certified fit for occupation as a place of residence. As such, it does not apply to commercial property.

In order to apply for an exemption, the applicant must show that:

  1. the private residence is owned and occupied by an individual; and
  2. the certificate of fitness for occupation or the Certificate of Completion & Compliance has been issued for that private residence.

It must be noted this exemption only applies to individuals. It does not apply if the private residence is owned by a company. A Permanent Resident in Malaysia is also entitled to apply for this exemption.

Am I subject to RPGT if I’m disposing of a property held under the estate of the deceased to a purchaser?

In this instance, the date on which the Inland Revenue Board will take into account to determine the acquisition date is the date of death of the deceased. In other words, there is RPGT payable if the disposal of the property is made within 5 years from the date of death of the deceased, even though the deceased has owned the property for more than 5 years during his lifetime.

Am I required to pay RPGT if it is a transfer between family members?

The law provides for 100% exemption from having to pay RPGT in the case of transfer of property between family members by way of love and affection in the following instances:

  1. transfer between husband and wife;
  2. transfer between parent and child; and
  3. transfer between grandparent and grandchild.

In these instances, the transferor is deemed to have received no gain and suffered no loss and the transferee is deemed to have acquired the property at an acquisition price equal to the acquisition price paid by the transferor together with any permitted expenses incurred by the transferor.

Apart from the above transfers, any forms of transfer between family members are not entitled to apply for exemption, such as transfer between siblings.

(This article was published in the February 2016 issue of Home & Decor magazine.)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

 

 

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