The Malaysian government maintains that housing should be, first and foremost, for Malaysians. As the economy has grown, Malaysians have been able to spend more money on housing. Accordingly, the minimum purchase price requirements that apply to foreign real estate investors have been set purposely higher than most Malaysians can afford. This restricts foreign buyers to the luxury housing market. The minimum purchase price for foreign property transactions has increased several times over the past decade. As recently as 2009, a foreigner could buy any real estate in Malaysia for as little as RM250,000 (about US$73,600 at that time). This minimum purchase price doubled in 2010 and again in 2014. In early 2014, the government changed the existing housing laws. For the first time, MM2H visa holders could take advantage of a reduced minimum purchase price for real estate in some Malaysian localities. Although a minimum price of RM1 million (about US$310,100) has been established, some states and municipalities offer incentives to foreign permanent residents. As of March 2014, MM2H visa holders can purchase property in the state of Perak, which includes the city of Ipoh, for just RM350,000 (US$108,530)—a significant reduction from the RM1 million required for non-MM2H holders. Meanwhile, the minimum purchase price of property in the state of Sarawak, including the city of Kuching, is now RM300,000 (US$93,026). Effective this February, the state of Penang, including the internationally famous food and heritage city of George Town, allows permanent residents to purchase property for RM500,000 (US$155,044), in addition to paying a state levy of 3%. On the island of Penang, those without the MM2H status are limited to purchasing property with a minimum value of RM1 million for a condominium, or RM2 million (US$620,174) for landed property, in addition to the state levy of 3%. Foreigners with permanent residency can purchase a condominium in Melaka for RM500,000, but the minimum purchase price for landed property is set at RM1 million. Reports differ, but the official government MM2H website states that the minimum purchase price for property in Kuala Lumpur is currently RM1 million regardless of residency status. Until this year, the lack of capital gains taxes had made real estate attractive to investors. Foreigners from Singapore, East Asia, and elsewhere have purchased property with the intention of flipping it for profit a few months or years later. The change in the Real Property Gains Tax (RPGT) is the most significant law affecting the purchase and sale of real estate by foreigners. The RPGT was enacted in January 2014 to dampen what the government believed was foreign over-speculation in the real estate market. This new capital gains tax assesses foreigners a 30% tax on any property that is sold within the first three years of purchase for permanent residents—or sold within five years for nonresidents. Permanent residents are assessed a 20% RPGT if the property is held for less than four years and a 15% RPGT if the property is sold within five years. If the property is held for more than five years, nonresidents will be assessed a RPGT of 5% on selling. No RPGT is assessed for permanent residents who sell their property five years after the date of purchase. There is a one-time-only exemption on the RPGT if the individual sells a residential property and no RPGT assessed if the property is transferred from one family member to another. Although the state of Johor Bahru requires that foreigners purchase property at the normal minimum price of RM1 million whether they have permanent residency or not, there is no minimum price requirement in Johor Bahru's township of Medini. Medini is located in Nusajaya, which is part of the Iskandar Malaysia Special Economic Zone that encompasses the majority of Johor Bahru's metropolitan area. Iskandar is Malaysia's largest single urban development project to date. Key features of the Medini project include several low-density residential developments with amenities that include golf courses, a health and wellness village, swimming pools and Jacuzzis, 24-hour security, access to several international schools and universities, prime shopping areas, and an easy commute to Singapore. Foreign real estate investors are also exempt from the RPGT when buying property in the Medini development. This is currently the only place in Malaysia that does not assess the RPGT, so purchasing a home here can be an attractive short-term investment. The average residential value for property in the state of Johor has increased more than 45% over the past five years, compared to an average of just 30% in the rest of Malaysia. Foreigners must pay a state levy of 2% or RM20,000 (US$6,224), whichever is higher, when purchasing property anywhere in the state of Johor. This is the first time that MM2H visa holders have a real advantage over nonresident foreigners in the real estate market. Although the RPGT applies to all foreigners buying real estate (other than in Medini), the lowered minimum purchase requirements offer MM2H holders an incentive to buy, rather than rent, their home. The additional incentive of eligibility for 80% mortgage financing is another advantage for permanent residents. Complete information about the benefits and requirements for the MM2H visa can be found on the official website. Wendy Justice
Santa Claus is in the shopping malls, attracting large and diverse crowds, and we've seen women from the Middle East, wearing full-face veils, posing for pictures with their children alongside him and Mrs. Claus. The malls all have elaborate Christmas displays with gingerbread houses and massive Christmas trees with all the trimmings. Some of the decorations are a bit odd—giant mushrooms, for example, or suggestive, scantily clad angels—giving the impression that folks here aren't quite sure just what Christmas should be. What is absent in all the displays is any suggestion of the religious significance of the day. To the Malaysians, Christmas is just another holiday to celebrate after a long season of holidays: Ramadan and Hari Raya (both Islamic), the Islamic New Year, the (Chinese) Mooncake Festival, Deepavali (Hindu), school holidays...and Christmas. Shops use it as an excuse for giant end-of-year sales, and the malls are busy. Christmas is a legal holiday in Malaysia, although most stores and restaurants stay open. Many of the Christian Chinese and Indian families hold open houses to celebrate the day with friends and family and go to church. Perhaps the strangest thing about Christmas in Kuala Lumpur is the big Christmas Eve buffets offered at hotels around the city. These are elaborate feasts, with turkey, roast beef and all the trimmings, local specialties, and a fantastic selection of desserts. That's not the strange part. What is unexpected are the party favors and the New Year's Eve-style countdown to Midnight and the official start of Christmas Day. There are dances, visits by Santa, and Christmas skits (again, secular). At Midnight, fireworks erupt. Malaysians love their fireworks, and almost every holiday is celebrated by a display of them, but we had never before considered Christmas a fireworks kind of day!Wendy Justice
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Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter.
Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.
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