Revival of the 30% Real Property Gain Tax (RPGT)?

Posted by Kris | Wednesday, September 26, 2012 | | 0 comments »

Since the budget 2013 is coming soon, there are talks, rumors about the possible action that the government is going to talk to further clamp down the  super dizzying property prices. Hence, the increase of RPGT is in cards. But the question is how much?

Personally, I don't think 30% tax bracket is going to happen. If this were so, the property prices at this moment in time will have a hard landing. Especially in trouble would be future planned development projects. House flipping would not be very profitable (can be painful) and smaller developers would be hit hard. Property related stock counters would be impacted too,  since they are having a good run up in prices in recent years.

In my opinion, another 10% increase of the RPGT will STRONGLY discouraged house flippers whom expects to reap "handsome" return after getting vacant possession. Things to consider when flipping is the lock out period charges, lawyer fees, interests served, etc. All this could reduce your profits. A increase of RPGT will seriously lessen your joy. 

My advice for my junior friends who have yet to own a property:

Why not buy a sub-sale property instead of rushing to grab a piece of property that can only be seen 3-4 years down the road? For the same amount of money or lower, you can easily buy a sub-sale property minus future un-forseen development risks. Use the extra money to renovate if you don't like the designs :)