Calculated based on Market Value or consideration paid, whichever is the higher. What does it mean? Part 2.
At a later time when you dispose off your property, you are subjected to Real Property Gains Tax. The disposal price let say is below general price as you wanted to give the property as a good bargain to your friend – RM500k instead of RM550k.
The gain is calculated from RM550k rather than the actual consideration paid which is RM500k. This will arrive at a higher profit which is levied a tax.
Thus, market value is important to determine if you have transacted above or below it to arrive at a tax to the government. Government should not be disadvantaged in collection of taxes by manipulating the transaction price.