Real Property Gain Tax (RPGT) Tips

Since I just sold my house lately, I just want to share with you some tips for this real property gain tax (i.e. RPGT) that I learned.


First tip is you can apply for waiver for this RPGT once in a life time. This means once you use it, that's it. So think carefully before you apply for this. :D

There are forms (from Income tax office) that you need to fill up for this application. For convenient, you can just ask your lawyer to do that for you. Most lawyers offer this service. You still need to pay for the RGPT and once your application is approved, they will refund your money.

You need to show this document (either one) for this RPGT waiver applications:

• Your electricity or water bill OR
• Occupation Certificate (i.e. OC) of your house

A lot people do not know about this OC thingy, even for my lawyer. I figured that out myself from my income tax office website. This is very useful especially if you have new house and not vacant yet, and you want to sell your house. No electricity or water bill is required.


Second tip is don't put 2 names under this property if you trust the other party. The reason is if this property belongs to 2 of you (e.g. couples), you both need to apply for this RPGT waiver. Once both of you applied, that's it. You both have already used this once in a life time ticket! lol :) If you trust your partner and just use one name, you can save one more time of RPGT waiver in future. :)


Okay, that's all! Hope this helps! :)

My Home Loan Application Mistake - Ignore Lock-in Period

I just want to share with you guys on 1 mistake that made in my home loan application. The mistake is "I did NOT really negotiate the lock-in period" condition when I accepted the loan offer.

Note: Lock-in period is the period where you cannot settle your loan. If you do, then you will need to pay the penalty fee. 

The reason I didn't do that is because I didn't plan to sell the house in short term and I bought it for own staying. So I put "No Effort" at all to negotiate this lock-in period. Whatever the bank offered me, I just accepted it.

But in personal finance, you always plan on the worst case and in this case, I failed to do that. :) Thing changes especially it is > 2 years, okay I learn that now.

There are few things that you can negotiate and different bank may offer you different condition for this lock-in period. Let's see what you can negotiate here:


(1) Lock-in Period 

In Malaysia, the lock-in period is usually between 3 to 5 years. Try to negotiate for 3 years. My recent loan is just 3 years. So I was lucky, I didn't bother but got the minimum lock-in period. :)


(2) First Draw Down vs Full Draw Down

If your lock-in period start date is based on the full draw down, you should always negotiate it for first draw down instead. For example if your lock-in period is 3 years:

First draw down - 2013
Full draw down - 2015

If based on first draw down, your lock-in period ends in 2016 but if it is based on your full draw down, it ends in 2018. You basically waste your 2 years!!! Fortunately, my case is based on first draw down. I believe most banks do?


(3) Penalty on Outstanding vs Original Loan

Penalty % is usually standard, I think is 3%. The most critical thing is whether the penalty is based on outstanding or original loan. This is the part I was unlucky. :( Too bad, my loan is based on original total loan! :(

It is important that you better negotiate for penalty based on the outstanding loan especially you are cash rich. In example below, you can save $12K!

Loan Amount - $800K
Outstanding Loan - $400K

Penalty on original loan - $800K X 3% = $24K
Penalty on outstanding loan - $400K X 3% = $12K

[Update]: My lock-in period's penalty fee is 2% not 3%. Not sure why I remember wrongly. At least this is something lucky for me! :) 


Summary

So, which one has the highest priority? I don't know, I think all 3 are equally important. You can just negotiate all these 3 together to get the minimum penalty as possible! Good luck and don't repeat my mistake! :)

P/S: Do you know car loan is always 1.9X of housing loan? Check this out here!!!