High-end properties have seen increased interest in the past three months.

REAL estate agents say they hope that a one-year extension on property taxation rates until August 2010, coupled with an improving economic climate, will equal good news for the industry.

An official from the Internal Revenue Department, under the Ministry of Finance and Revenue, said on July 23 that property sales taxes will remain the same for another year.

That means that sales taxes for property sales worth less than K5 billion remain capped at 15 percent, while those worth more than K5 billion stay at 12pc. The sales tax is split into an 8pc revenue levy and 7pc stamp duty.

Prior to August 2007 that tax was 50pc for anyone unable to provide evidence of how they were making their money.

“We’re allowing an extension of the current tax ratio for one year, which will see it continue unchanged until August 2010,” a spokesperson said.

U Than Oo, the managing director of Mundine real estate agency, said he hoped the rolling over of the taxation law would lead to some much needed stability.

“Extending the tax law for another year will hopefully lead to more activity in the sector and a gradual price rise for property. I think that without disruptions like Cyclone Nargis and the global financial crisis we will see the property improve in the year ahead,” he said.

U Than Oo predicted that sale activity is most likely to be seen in the high-end market for properties in townships like Bahan, Kamaryut and Mayangone townships.

U Bo Bo Kyaw, the manager of Sai Khun Naung real estate agency, attempted to persuade those who have been waiting to see how the financial crisis panned out to enter the market now.

“This one-year extension should present an attractive proposition for anyone interested in buying a high-end property but was scared to during the crisis. And I think there will be strong activity during the course of this year in the K400-500 million range,” he said.

U Zaw Zaw, the manager of Unity real estate agency, said he was sure the tax extension would see prices rise.

“It hard to say exactly how many percent prices will rise but I’m certain they will, especially in Dagon and Bahan townships for properties selling for up to K1 billion,” he said.

He added that the continued prosperity of the industry would hinge on the outcome of the elections slated to take place next year.

U Ko Ko Lay, the director of Three Friends Construction, said the tax extension might persuade developers to begin new projects.

“Developers have been waiting to see whether the current taxation rate would continue before deciding to start new projects.

“If that tax was increased back to 50pc I think the industry would slow considerably,” he said, adding that buyers were much easier to find when taxes were lower.

“A tax rate of 15pc, without needing to prove how you earned that money, means buyers are able to walk away with a clear ownership certificate. And the revenue department is happy because everyone pays their taxes,” he said.
The tax extension remains in force until August 12.