Johor to raise property tax for foreigners

“I believe that most locals will be in agreement over this new policy and it is done to increase our state’s returns,” he said on Saturday, adding that the new rates will be implemented by the end of the year.

He said that the rates will be re-evaluated to reflect current property values as the last formal evaluation was done in the 1980s.

“Taxpayers need not worry about the evaluations as [existing] property taxes will be retained for lower-priced properties,” he said.

The proposed increase is seen as a way for the Johor government to rein in skyrocketing property prices spurred by keen interest among foreign buyers, 90 per cent of whom are Singaporeans. In Johor, the annual assessment rate for residential properties is 0.14 per cent of the property value and 0.2 per cent for business holdings. For a 500,000 ringgit (Bt4.92 million) house, owners need to pay 700 ringgit a year.

Foreign and local property owners in Malaysia are charged two types of property taxes - assessment tax, based on the rental value of the property, and quit rent, determined by the land size of the property. The amounts vary from one municipality to another.

Johor property agents were unsure of the impact that new rates will bring to the market. “Foreigners might be taken aback, but they will see that property prices in Johor are still affordable,” said one.