Malaysia’s property market will become markedly more appealing to investment buyers as of the first of April when the country eliminates capital gains tax on all property deals. Whilst sellers are currently obliged to pay 30% tax on the profit made on a property, Prime Minister Abdullah Ahmad Badawi recently announced plans to abolish the levy. It is hoped that this decision will “inject more excitement and dynamism in both the property and financial sectors” and compliment the other pro-investment incentives implemented by the government.
Whilst CGT formerly discouraged property sales it is hoped that its absence will result in market liquidity and a healthier investment environment. Although the Malaysian property market is relatively undervalued compared to other countries, its robust, reassuring and stable economy and the removal of this tax should contribute to a rejuvenation of the property sector. Healthy foreign exchange reserves, low inflation, small external debt, unemployment below 4%, GDP over 5.5% for the past three years and consumer confidence sustained near 10%, all indicate that Malaysia’s economic future is set to flourish.
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