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Sell Now? Sell 2 yrs later (RGPT 5%), or Rent Out

matix

Alfrescian
Loyal
I have come to the conclusion that we are unable to join the lucky ones living in JB. Traffic jams, fears (too much sensationalized crime reports) have finally make us decide not to move in. I am still very keen but better half is very firm in refusing to move. So, now we are stuck with a decision on what to do with our current asset in JB. Here are my choices. Constructive suggestions and advice, please. I am on the verge of a nervous breakdown...

Option 1
Sell now and pay 30% RGPT. The easiest way out as we exit immediately and put everything behind us. But painful to pay 30% RGPT.

Option 2

Wait for 1 and a half year more before selling and pay 5% RGPT. Disadvantage is that it will still be around and quarrels may still flare up. Especially if property prices head south. My argument is that it is unlikley to depreciate to the level of 25% RGPT in payment. And more likely to appreciate instead of depreciaing... But of course, no one knows 100% for sure... We are also worried of leaving an empty house to the elements. May get unsighty after months of neglect..

Option 3

Renovate and rent out and still sell 1 and a half year later (RGPT 5%) This option include all the disadvatages of Option 2 and more... She is most against this idea as she doesn't want to pump in any more money into the house. But I am looking at it from an investment point of view. She is worried about tenants problems, such as not paying rent and "destroying" the house, etc.. Which is valid, but a necessary investment risk. As we bought 3 years ago, the yield is about 10%. On top of that, I read elsewhere that renovation cost can be used to offset paying RGPT. Is this true? Anyone who has successfully done it comment? I need to show proof to her as she doesn't believe anything as she heard govt policies always changing.. Does that mean that if we spend 100K on renovation, and when we sold and RGPT payable is 200K, we only need to pay 100K? If this is the case, there is a strong push to go for Option 3.

The reason why she is keen to bring back the cash is that she wants to move to a new apt in Singapore. Logically, it is a crazy idea for me with prices heading south here. But that is what needed done emotionally. We are still able to take a hefty loan without selling the Malaysia house. But the argument is to bring back the cash and reduce the loan quantum. At the end of the day, I just need to convince her on the wisest decison to make and explain all the risks to her. Hence, hope that some seasoned investors can help me work on the numbers, pros and cons.. Thanks and zillion.
 

crystal_tiong

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Loyal
dun even wan to consider weekends home ? u bought in EL right ? rent out should be ok as tenants over there are much better class....
 

sotong007

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Loyal
if keep quarreling with wife might as well sell coz u wont make a loss anyway....... 30% of profit is not a lot, can deduct all the transaction expenses from sale profit before the tax
 

kopikong99

Alfrescian
Loyal
Renovate and rent out and still sell 1 and a half year later (RGPT 5%) This option include all the disadvatages of Option 2 and more... She is most against this idea as she doesn't want to pump in any more money into the house. But I am looking at it from an investment point of view. She is worried about tenants problems, such as not paying rent and "destroying" the house, etc.. Which is valid, but a necessary investment risk. As we bought 3 years ago, the yield is about 10%. On top of that, I read elsewhere that renovation cost can be used to offset paying RGPT. Is this true? Anyone who has successfully done it comment? I need to show proof to her as she doesn't believe anything as she heard govt policies always changing.. Does that mean that if we spend 100K on renovation, and when we sold and RGPT payable is 200K, we only need to pay 100K? If this is the case, there is a strong push to go for Option 3.

Yes, the renovation cost is able to be deducted off from the profit. All lawyer's fees, broker fees, bank interest, whatever costs incurred, just submit for deduction.

Please keep every receipts.

Though it is 10% of the profits, it is actually less than significantly lower than the 10% that I have calculated. Not sure of what rebate was given on top of all the deduction.

But then I must qualified that this is the facts that I have gotten from the money released by the lawyer.
 

matix

Alfrescian
Loyal
Yes, the renovation cost is able to be deducted off from the profit. All lawyer's fees, broker fees, bank interest, whatever costs incurred, just submit for deduction.

Please keep every receipts.

Though it is 10% of the profits, it is actually less than significantly lower than the 10% that I have calculated. Not sure of what rebate was given on top of all the deduction.

But then I must qualified that this is the facts that I have gotten from the money released by the lawyer.

Hi Kopikong

Can you clarify what do you mean by 10% of the profit? Let's say profit is 200K, and renovation and all fees is 100K. I thought that total deductable is 100K?
 

malpaso

Alfrescian
Loyal
Option 3

Renovate and rent out and still sell 1 and a half year later (RGPT 5%) This option include all the disadvatages of Option 2 and more... She is most against this idea as she doesn't want to pump in any more money into the house. But I am looking at it from an investment point of view. She is worried about tenants problems, such as not paying rent and "destroying" the house, etc.. Which is valid, but a necessary investment risk. As we bought 3 years ago, the yield is about 10%. On top of that, I read elsewhere that renovation cost can be used to offset paying RGPT. Is this true? Anyone who has successfully done it comment? I need to show proof to her as she doesn't believe anything as she heard govt policies always changing.. Does that mean that if we spend 100K on renovation, and when we sold and RGPT payable is 200K, we only need to pay 100K? .

Sad to hear.

Gains = Sell price - SPA price less costs
Costs may be agent commission, cost to maintain the place, to beautify / add value to it (so taht easier to sell), also the amount of % interest you paid for your bank loan.

IIRC, I believe reno can claim as costs. But i think!, you can only claim once. ie if you claim against rental income, i'm not sure if you can claim again under RPGT costs.

Also, Remember, your rental is 26-28% taxable since you're non resident. If your annual rent is 100k, you may deduct expenses, and the remainder profits are subject to 26-28% income tax.

from your example, if your SPA price is 800k and you sold it for 1M, and if your costs are 100k, then your profit is 200k, and the gains less cost will be your the taxable gain under RPGT (200-100=100k).

[ed: also there is a 10k or 10% exemption on chrgeable gain - pls check if it apply to foreigners..].. hence your RPGs will be 100 - 10=90K.
So you pay RPGT (15% or watever) of 90k.

In summary - if you really really not intending to hold it, best to let it go if got profit. Next year anything could happen.
 
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RedsYNWA

Alfrescian
Loyal
Sell only after next yr April, after announcement of RTS location & implementation of GST. Sg home prices will also go down further then.
 

malpaso

Alfrescian
Loyal
Yes, the renovation cost is able to be deducted off from the profit. All lawyer's fees, broker fees, bank interest, whatever costs incurred, just submit for deduction.

Please keep every receipts.

Though it is 10% of the profits, it is actually less than significantly lower than the 10% that I have calculated. Not sure of what rebate was given on top of all the deduction.

But then I must qualified that this is the facts that I have gotten from the money released by the lawyer.

what about if you have already claimed the reno costs against your rental as income tax deduction? can offset the same reno costs again during calculation of property gains tax?
 

FHBH12

Alfrescian
Loyal
Sell only after next yr April, after announcement of RTS location & implementation of GST. Sg home prices will also go down further then.

Yeah, holding cost is low. Sell later if you really don't need the cash now. If you don't have a house yet in Singapore, sell the EL house and good to get a condo now. Panorama in Ang Mo Kio is selling at a good discount and close to the future MRT line that will bring you to JB. I doubt you can find such good deal by Q4 this year.
 

malpaso

Alfrescian
Loyal
Yeah, holding cost is low. Sell later if you really don't need the cash now. If you don't have a house yet in Singapore, sell the EL house and good to get a condo now. Panorama in Ang Mo Kio is selling at a good discount and close to the future MRT line that will bring you to JB. I doubt you can find such good deal by Q4 this year.

how much is panorama selling?
 

kawan2sgmy

Alfrescian
Loyal
matix,
Sorry to learn that U got to sell due to unforeseen circumstances - the causeway jams!!! Nobody predicted that it could be so bad! Got stuck at the jams for hours is really frustrating! But you sound like you still quite like your house?
From now on , whatever decisions you make, get your better half to be involved. Depending on how things pan out in future, whether it's right or wrong, you cannot be blamed. As the saying goes: U so clever, U decide lah! I bochap... just joking
From now on, it's better to have joint discussion = joint decision = right or wrong = 2 people get credit or 2 people get the blamed. Sometimes it's easy to buy, but when comes to selling, lots of questions... but that's life lah...
You sound like your better half wants to get out completely, so I think it's better to sell and exit completely. It's indeed difficult to make a decision right now.
進退很難做出決定
 
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LeMans2011

Alfrescian
Loyal
matix,
Sorry to learn that U got to sell due to unforeseen circumstances - the causeway jams!!! Nobody predicted that it could be so bad! Got stuck at the jams for hours is really frustrating! But you sound like you still quite like your house?
From now on , whatever decisions you make, get your better half to be involved. Depending on how things pan out in future, whether it's right or wrong, you cannot be blamed. As the saying goes: U so clever, U decide lah! I bochap... just joking
From now on, it's better to have joint discussion = joint decision = right or wrong = 2 people get credit or 2 people get the blamed. Sometimes it's easy to buy, but when comes to selling, lots of questions... but that's life lah...
You sound like your better half wants to get out completely, so I think it's better to sell and exit completely. It's indeed difficult to make a decision right now.
進退很難做出決定

Indeed there are times one is faced with the choice between the wife and the house. My experience tells me this is one of the situation that produces the worst investment decision. Logic tells you just rent the house out since the holding cost is low, the EL enclave is generally not in the league of those who tear down your house (touch wood!). But faced with an emotional wife it can be quite hard.

Give you an example of my own life experience: we bought a condo in year 2000... the next few years the price went down by 250k! We could afford it an i wanted to buy another small unit to "average down". However she said i am making another mistake after the first one! So in the end we sold it when price recovered, but what great earning opportunity we missed.

Having said that, your wife is probably more important than making investment profits...
 
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