Tax breaks to buy first home By THE STAR

This is the first of a three-part question-and-answer series provided by PricewaterhouseCoopers for The Star readers on various aspects of Budget 2009.

Q: My husband and I plan to buy our first house next year. I heard from my friend that there are some exemptions proposed in the 2009 Budget which can help us in owning our first home. Please elaborate. As we do not have fixed income, we will need all the assistance we can get.

A: If you are buying a low-cost house, you will get full stamp duty exemption on all documents, including loan agreements. However, if you are buying a medium-cost house of up to RM250,000, you will get a 50% stamp duty exemption on the loan agreement, in addition to the 50% stamp duty exemption on the sale and purchase agreement currently available. However, you need to be a Malaysian citizen to be eligible for the exemption and it is limited to the purchase of one residential property only. Please note that the stamp duty exemption is effective for sale and purchase agreements executed from Aug 30, 2008, to Dec 31, 2010.

As you do not have a fixed income, you may benefit from the Housing Credit Guarantee Scheme, which is a fund set up to assist those without fixed income to obtain housing loans from any financial institutions to purchase low- and medium-cost houses.

Q: I am a Malaysian and have been working overseas for the last five years. However, I still continue to receive rental income in Malaysia. How will I be taxed differently under the proposed legislation?

A: Your rental income would be subject to tax in Malaysia as it is a Malaysian sourced income. Prior to 2009, your rental income will be taxed at a non-resident rate of 28%. However, under the proposed legislation, your non-resident tax rate will be reduced to 27% in year of assessment 2009.

by The Star