Fractional ownership as a viable form of investment in Malaysia

By Sharil Tarmize

Siew urges investors to properly understand the structures of fractional ownership before investing.

Siew urges investors to properly understand the structures of fractional ownership before investing.

Petaling Jaya: Fractional ownership is a viable form of investment because it provides an easy entry for people who have insufficient deposit or funding to own a house.

Fractional ownership works by paying a fraction of the house instead of paying the entire amount of the house price. Some property investors might not be aware of the fact that some investments in fractional ownership have no Real Property Gain Tax (RPGT) on disposal.

The investors won’t be charged with Real Property Gain Tax (RPGT) if they only sell the rights to enjoy their properties through a contract instead of the property itself to the buyers,

When the name of the property owner remains unchanged in legal documents, hence  RPGT will not be implemented towards these property investors.

However, property investors need to carefully understand all the structures of this investment before selling their fractions to buyers to avoid potential lawsuits.

According to LePro System Bhd co-founder Elizabeth Siew, Malaysian property investors need fractional ownership as it does not require a bank loan.

“With fractional ownership, It helps investors to retain a good amount of liquidity by just selling half a lot or a fraction of it to friends or family instead of selling it as a whole when they need capital,” she said.

“Without bank intervention, the property owners are free to unlock the real value of their properties such as renovating and upgrading their homes for fractional ownership purposes,” said Siew.

In this era, property investors can have the world as their market since they can connect to almost everyone through social media or the internet.

“Property investors can set up a social media account or blog to link up people from all over the world to promote and sell their fractions of the properties to potential buyers,” added Siew.

By using Paypal or credit card, foreigners or outsiders can easily make all the payments towards these investors to join this form of investment.

Meanwhile, Syarikat Ong Bhd managing partner, Agnes Wong explained that many countries had signed the agreement to take part in Automatic Exchange of Information (A.E.O.I.) to combat with Base Erosion and Profit Shifting (BEPS).

“All of the financial information of either international Malaysian company account or individual account holder outside of this country will be passed to Inland Revenue Board of Malaysia to make sure no one is avoiding the tax,” she added.