Budget 2014: Property Sector Hit Hard by RPGT and DIBS ruling

As widely expected, property sector would be one of the hardest hit sector in view of the proposed cooling measures to be imposed. Out of the 3 tightening rules forecast by Finance Malaysia, 2 already Bingo! (Read our previous articles regarding property sector "3 Tighter Rules for Property Sector?" and "3 Critical Factors to watch out by Year End")

These cooling measures announced highlighting that government will not hesitate to curb property speculations and to ensure a affordable property prices. Of course, property developers will be the one screaming painfully.

The 3 Key Measures:

1. Higher Real Property Gains Tax (RPGT)
   This was the 3rd consecutive year government raised RPGT. Even said so, it was just reinstated back to its original rates since 2007. The different this time compared to previous rounds was different set of rates to be imposed on different categories of buyers as shown below:
   
   
   
   
   
   
   
2. Banning DIBS
   As predicted by us previously, DIBS was deemed to be one of the key motivating factor for speculators, thus pushing up property prices to current level. By banning DIBS, it will effectively diminished the speculative interest as the cost of investment increase with interest payment during construction period. It's good to genuine and first-time house buyers.
   
   
3. Higher minimum Purchased Price for Foreigners
   To minimized influx of hot money shoring up local property prices, government raised the minimum purchased price to above RM1mil from RM500k per unit. However, this doesn't impact the market much because most properties purchased by foreigners are above RM1mil. Nevertheless, foreigners' favorite investment hotspot, such as Iskandar or KLCC or Mont Kiara area would be affected.

Would this be the end of property up-cycle?

Budget 2014: Good to have GST ?

Definitely, one of the hottest debate in Budget 2014 would be the implementation of 6% Goods and Services Tax (GST) starting April 2015. Although it was opposed strongly by opposition parties, government pushed ahead with its implementation emphasizing GST as a "fair and comprehensive" tax as the current tax system has many weaknesses.

Why GST is a MUST ?

Without you realizing, our current tax system has many loopholes whereby many people do not fulfill their responsibilities as a taxpayer. They tends to under-stated their real income, paying less tax than they should, or even worse... none. However, under the GST system, everyone will be taxed every time you spend.

And, if you're paying tax now, you should be happier. Why? Simply because government have a wider tax revenue now with GST because everyone is paying tax. Wouldn't it better?

Why April 2015 ?

Instead of Jan 2015 (expected date), government now has more time to explain and educate the public on GST. In other words, government is playing it safe, "buying time" to minimize the misunderstanding among Malaysians.

Is it okay ?

Implementation is very vital. It's best to implement GST and lowering down the personal income tax rate simultaneously. And, this time government did consider this well. As long as it was implemented properly, this should bode well for our nation to broaden the tax revenue, thus reducing the budget deficit and maintaining the credit rating of our country's obligations.

Why MyEG ?

Strange question over here? Yes. As we knew, MyEG already successfully completed its trial version for GST computation in business premises. Do you know why MyEG shoot up to all-time high to closed at RM2.25 today?

Money Management Concept of 70s, 80s, 90s

When come to money matters, different generations have their own thinking. Before reading on, please listen to your heart deep down inside, what is your thinking? Hahaaa.... Bingo? Let's see...

70s: Saving

Generally, this generation not only hardworking in job, but also hardworking in saving. They usually save their money in banks or placed it in fixed deposit, cultivating a very good saving habit. Pre-retirement: Wealth Accumulation and investing in their children's education. Post-retirement: Wealth Enjoyment and depending the financial support from children. That's a great trade off (at least for that generation)!!!

80s: Self-Sustainable

Due to higher inflation, this materials emphasis generation feeling the pinch of not enough money every month. Credit card, car loan, housing loan, insurance premium... !!! No wonder many of them financially critical when come to month ends. Parents for 80s will be more than happy, if their 80s children doesn't need their financial support anymore. God bless!

90s: Consuming
For them, money is meant to be spent. In other words, this would be a great loss to them if they don't enjoy life now. Very often, they learnt how to spend first before saving money. Anyway, parents were their ATM (Automatic Tomorrow's Money), continuing financial support for their beloved children. Hence, financial management and saving concept for 90s usually is poorer.

So, is this true?

UnTold EPF RM2500 Death Benefit?

Lately, there is a chain email spreading across social media regarding EPF Death Benefit as below:

" ATTENTION to everyone who has an EPF account !!! No matter how old are you, no matter how long you have held your EPF account, no matter how much money you have in you EPF account, and matter how long you have paid for your EPF, according to Government Law, EPF will need to pay RM 2500 to an EPF account holder's family when he/she died (family members need to claim the RM 2500 within 2 months). EPF never inform us about this, I reckon very few people's family did actually receive this RM 2500 when his/her family member died because not many people know about this. Where did this RM 2500 goes when the died's family did not claim for RM 2500? Someone's pocket ??? We don't know! So please bombarded this info to all your families, relatives, colleagues and friends, let them know about this info and remember to claim RM 2500 when his/her family die. Don't let this RM 2500 goes to someone's pocket !!! "

Is this true? Below is the respond from EPF:

The above email contained untruthful accusation. The EPF would like to inform its members that a Death Benefit payment of RM2,500 will be presented to the dependents of the deceased members as a gesture of compassion and to ease their financial burden. However, this benefit will only be given once and subject to the following conditions:

• Malaysian citizen;
• Member has not reached the age of 55 at time of death;
• Application for Death Withdrawal is made within 6 months from the date of the demise of the member.

The Death Benefit is payable to the members’ dependent or next-of-kin when the application for Death Withdrawal is made. 

The EPF would also like to emphasis that the money for Death Benefit comes from EPF’s investment earnings and not from the members’ savings. If the dependent does not qualify under the conditions for Death Benefit, the money will still remain with the EPF to be distributed to all members as annual dividend.

Source: EPF

5 Unusual Tricks to Help you Save Up

Saving money is not always as easy as it first seems, and all those good intentions and budgets can fly out of the window without you even noticing – so why not try some more unusual money saving tips? Here are five of our best tips to help you save up!

1. Never pay with coins
   That’s right, take out all those coins weighing down your purse or wallet and put them in a piggy bank or jar instead. That 10 Sen coin isn't worth much on its own, but once you start saving up all your coins, it can add up to a considerable sum. Avoid the temptation of dipping into your coin fund by storing in it a tin with just a coin slot at the top. If you have to get out a can opener to access those coins, you’re more likely to wait until it’s full before you open it!
   
   
2.  Never say NO to a freebie
   Whether it’s free shampoo and soap from a hotel or free condiments from a restaurant, stock up! These free products are just as good, but with the added bonus that they cost you nothing. It also means that you get better value on your hotel room and meal out, so it’s a win-win situation.
   
   
3. Sleep on it
   Make a deal with yourself: Don’t buy something the first time you see it. Shopping can be a dangerous experience for those wanting to save up, and sometimes all that temptation can get too much. So avoid all that hassle and post-shopping regret by not buying anything the first time you see it or try it on. Go home, sleep on it, look at your finances and your budget and decide whether you really need it, or whether you can survive without it.
   
   
4. Find a partner who’s good with money
   If your partner is always overspending, borrowing money from you and forgetting to pay their bills, chances are you’re not going to be that good with money either. We’re not saying you should break up with your partner if they’re not good with money, but you should definitely sit down together and discuss your expectations when it comes to finances – money is the number one cause of arguments in relationships, so don’t let it ruin yours too.
   
   If you’re still single, on the other hand, why not add “good with money” to your list of criteria? A smart spender will encourage you to save, and will help you to get back on track if you fall off the saving bandwagon.
   
   
5. Save the environment and your money at the same time
   You've heard it a thousand times before: switch off the lights when you’re not in the room, reuse paper, bottles and everything possible… It’s all great for the environment, but there’s another key reason to save energy and reduce, reuse and recycle: it saves you money!

Exclusively for Finance Malaysia Blog, this money saving tips is brought to you by comparehero.my, Malaysia's leading comparison portal.

Why Gold and Silver? Why Online Store?

Are you first time gold and silver buyers? Why don't you invest in these popular metals? If you did so, you have had a wonderful investing experience after 2008 global financial crisis. But, do you really understand these metals? Were they really precious (especially now)?

Traditionally, gold and silver were one form of exchange. Because of the invention of fiat money, they were being turned into some short of "back-up" currency, in case our fiat money system go burst. It's natural when things go wrong, gold and silver tends to appreciate in value. In other words, people hold precious metals to preserve the value of their assets.

3 Reasons Why Gold and Silver...

1. Still hot in demand, especially by emerging affluent Chinese. Traditionally, Chinese loves gold. They bought it for events such as new born baby, new year, wedding and even funeral ceremony.
2. Strengthening USD ??? Yes. It's a correct reason also. Why? Because of news that US going to stop QE3, USD is strengthening so much. But, we must not forget that Europe is still printing money. Then, how about Japan who jump into the bandwagon of money printing?
3. Simply for portfolio diversifying purpose. As a rule of thumb, 10% of our investment portfolio should allocate to precious metals like gold and silver. When everything goes haywire, precious metals tends to react reversely positive.

Alternative Distributing Channel...

Other than the commonly seen channel like banks and goldsmiths, have you ever think about online purchase? Why?

1. Normally, it's cheaper because it does not need to open a shop and employ security guard.
2. Convenient. You can view and select with the pleasure of your time, comfortably at home.
3. Safe delivery. It's depend. But, I will feel safer if it delivers to my doorstep, instead of going to purchase at goldsmith. Do you know someone might be following you?

Of course, some of you may skeptical about the reliability of the online store. You may try it with small purchase first (test the water before diving in). On this matter, one of the most popular online store in town was SilverMalaysia.com which already features in major dailies with wide media coverage. You may open an account, then explore further.

* Finance Malaysia Blog DO NOT holds any form of liabilities regarding the recommendations. Investors are advised to read and understand the terms and condition thoroughly.

3 Tighter Rules for Property Sector? (Sept 2013)

Prior to Budget 2014 (to be tabled next month), speculation has rift up on a few proposal to tighten the rules, especially on property sector. Following the outcry from public stating the alarming high property prices, measure should be taken to tackle the issue before bubble was formed.

The Bubbling Biz...

Among the measures being proposed were:

1. Non-other than Real Property Gain Tax (RPGT)
   
   
   
   
2. Higher Stamp Duty:
   ~ 5% of purchase price for 3rd property
   ~ 7.5% for 4th property
   ~ 10% for 5th property onward
   
   
3. Loan-to-Value ratio reduce to 60% for 3rd property onward
   
   

While the above info need to be ascertained further, some banks already implemented their in-house ruling. What's that? It was to limit the maximum term for refinancing of property to 10 years. Yes. Sooner or later, all of the banks will follow.

* Please note that the above 3 rules need to be ascertained further. Stay tune!