HOUSING prices are expected to go up by two to three per cent with the implementation of the six per cent Goods and Services Tax (GST) on April 1 next year.
Residential properties are tax-exempted instead of being zero-rated, leaving developers unable to claim the six per cent as part of input tax contributed to the GST, said Malaysia Property Expo (Mapex) 2014 chairman Datuk Ng Seing Liong.
“The developer, as a seller, cannot claim back input tax. It has to add the tax to the cost of construction and that will increase the selling price. The Real Estate and Housing Developers’ Association (Rehda) has proposed that properties priced at less than RM400,00 to be zero-rated.
“Zero-rated means the developers can claim back input tax so that they don’t have to pass on the increase to house buyers,” he said, here, Monday.
Rehda has submitted a memorandum to the government highlighting the impact of GST on housing prices.
It has organised meetings with the Urban Wellbeing, Housing and Local Government Ministry to discuss ways to cushion the GST impact on house buyers, which may involve a government concession.
Rehda has also proposed to the government to lower the proposed six per cent GST as the tax burden on the property industry is expected to be greater.
“In this line of business, we provide credit facilities of 30 and 60 days, and in some cases 90 days. But under the GST, you have to pay in under 21 days. Even though you have not collected the money, you have to pay the GST,” said Ng.
Rehda plans to hold a series of talks for prospective home buyers next month on the effects of GST to the housing sector.
Rehda is the organiser of Mapex, the country’s largest property fair.
It will be held at the Midvalley Exhibition Centre from October 10-12 and is expected to attract as many as 50,000 visitors this time around, with sales estimated at more than RM300 million.
“Last year, we hit sales of RM380 million,” Ng said.