THE Malaysian Developers’ Association has called on the government to consider zero-rating residential property purchases rather than exempting it from the Goods and Services Tax (GST) to ensure price would not increase post-GST.
Real Estate and Housing Developers’ Association (Rehda) patron Datuk Ng Seing Liong said when goods or services are GST-exempted, the developer will still have to absorb all GST charged on the construction materials to develop a property.
If the property is zero-rated, the developer may reclaim any GST paid on the construction materials and there would be no embedded GST in the final price of the property as it could be refunded.
“If the residential properties are zero-rated, we can expect no increase in properties priced at RM400,000 and below.
“Comparatively, if properties are GST-exempted, we expect about two to three per cent increase in property prices as the GST levied on the construction material would somehow be transferred to the total building cost,” he said at the preview ceremony of Mapex 2014.
“We would also like for affordable housing construction material tax to be reduced to between one and three per cent,” Ng said.
He added that the government should also abolish stamp duty on house purchases as it could result in double taxation to landowners and property developers.
“On top of the GST charged, stamp duties will also be charged, which will result in double taxation in some cases.
“A property priced at RM1.5 million will incur RM90,000 GST and RM33,000 of stamp duty in total, which is quite a sizeable amount to pay for taxes.”
Stamp duties for properties are payable at one per cent for the first RM100,000, two per cent for the next RM400,000 and three per cent for any sum exceeding RM500,000.
Selangor Rehda chairman Datuk Khor Chap Jen also urged the government to have the Developer Interest Bearing Scheme (DIBS) for homes of RM400,000 and below be reinstated.
“The DIBS, while it has helped reduce property speculation, has hindered first-time home buyers in owning their first homes.
“Banks should also play their role together with the government and developers as a macro entity to provide affordable housing solutions to first-time buyers.
“In addition to affordable housing, government should also make public transportation efficient as it would free up the disposable income from buying a car for the younger generation,” he said.