Key tips for shoplot buyers

The tax authorities will come after you if you dispose of your commercial property within a short period of time.

UHY Loh Chartered Accountants partner Loh Chye Teik said if the property was sold within a three-year period, the Inland Revenue Department could accuse you of trading activities and impose a hefty income tax on the gains.

He also said that owners of commercial property should ensure that the buildings were GST-compliant.

“This is necessary as the owners will need to charge the buyers of the property for GST,” he said.

Loh was presenting his talk ‘GST Implication on Home Prices & the Property Market’ during the Star Property Fair 2015 yesterday.

The four-day event is held at Sunway Carnival Mall and Convention Centre in Seberang Jaya.

In another talk called ‘GST Impact on Your Property Investment’, TY Teoh International’s national tax director Richard Oon said the GST was likely to trigger a slight increase in the pricing of property.

“This is because the developers of residential projects are not allowed to claim back the GST paid for the services and raw materials used in the construction of the projects,” said Oon.

“Since they cannot get a rebate on the GST, the developers will have no choice but to raise property prices.”

Oon urged investors to practise smart shopping when hunting for property and to look out for developers who offer GST absorption or subsidy schemes.

He said the developers of commercial projects could obtain GST rebates for the raw materials used to construct their buildings.

“Buyers of commercial projects will have to pay 6% GST.

“Thus, if the commercial property is not used to generate an income, then the GST paid will be an additional cost to the buyers,” he said.

Visitors also listened to Dr Daniel Gambero’s talk on ‘Propenomy of Penang’s Investment Grade Product’.

Dr Gambero, who is the chief executive officer and co-founder of strategic marketing consultancy firm REI Group of Companies, gave tips on how to look for property with investment grade product characteristics.

He advised investors to take note of the product’s medium and long-term potential which would enable them to generate the best possible returns.

Dr Gambero also said there was an optimistic outlook on developments in Malaysia, as the nation was ranked 20th in the global competitive index.

“Property investors should look for strategically sustainable locations.

“They should also practise good holding power in order to get the best possible return,” he said.

GM Training Academy CEO and founder Miichael Yeoh said there were three important aspects that banks consider prior to approving loans.

“The banks will first check the Credit Tip Off System to see if the applicant is a bankrupt or under legal proceedings.

“They will then check the Central Credit Reference Information System managed by Bank Negara for the borrower’s loan repayment records for the past 12 months.

“In the third step, the banks will then gauge the applicant’s repayment capacity via the debt service ratio before granting approval for loans,” he told the audience. - By The Star

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