What is Vacancy Tax could be imposed in Malaysia?
Vacancy tax to be imposed on properties that are unoccupied or unsold for a specified time. Aim to reduce overhand of residential units in our country.
As in edgeprop.my : Vacancy tax to imposed on developers as early as 2021 – Zuraida
KUALA LUMPUR (Aug 19): The Housing and Local Government Ministry (KPKT) is formulating a tax that could be imposed on developers who fail to sell their properties as early as early next year, in an effort to reduce overhang of residential units in the country. Read full in edgeprop
Why Vacancy Tax is bad and killing the market?
As far as we know, the only country that implements an unsold property tax is Singapore, which imposes an ABSD (additional buyer’s stamp duty) of 30% (5% non-remittable upon stamping) on unsold properties after five years from the date of acquisition of the land.
In addition, Singapore imposes a QC (qualifying certificate) tax of 8% on foreign developers.
The QC scheme requires a development to be completed in five years and all units to be fully sold within two years of completion.
The extension charge is 8% of the cost of the land for the first year of extension, 16% for the second year and 24% for the third and subsequent years.
- Developer will tend to sell on lower price first to avoid tax.
- Majority of home owner with mortgage, are we risking a major financial disaster?
- Never ending story…
Vacancy Tax confused with Unsold Property Tax?
The vacancy tax is quite a different subject altogether, which unfortunately has been confused with the unsold property tax.
The objective of the vacancy tax is to discourage foreign speculative and investment ownership of residential properties.
These cities attract large numbers of foreign buyers, who often keep their properties vacant or use them only as occasional resort homes.
They drive up property prices beyond the reach of the locals.
Many of these cities have housing shortage problems — which we don’t have here. Imposing this tax also forces these properties to be rented out, likely at low rents.
- Vacancy Tax suppose to discourage from speculation
- The only country that implements an unsold property tax is Singapore
Vacancy tax may further erode the property market, says MIPEAC
Points that I agreed:
- The overall property prices are expected to fall as developers may re-price their existing stocks and lower the selling price for new launches.
- Buyers may delay purchases to 2021 in anticipation of a potential fire sale by developers following the vacancy tax.
- NAPIC data largely reflects that although Malaysians need affordably priced houses
- Developers that are unable to sell their properties would already be bearing the interest and holding costs.
So if we buy a unit but leave it vacant, will we be taxed? Well, Malaysia does not have a vacancy tax.
For countries with a vacancy tax, their target is developers, not owners. (It’s actually unsold property tax)
In Singapore, developers need to be very careful because they may charge fees for unsold units.
By other countries with “Good Vacancy Tax” is aimed at foreign buyers who bought and then left the property empty.
Perhaps we could think of how to attract foreigners to purchase properties here and ‘encourage’ them to use it or tax them if they bought but did not use?
That would be interesting. Let’s see whether there’s this potential in the near future.