RPGT and Stamp Duty gift or died Q2


In January, 2022 MrLaw saw a warehouse with a market value of RM950,000. This warehouse was on sale by an agent Mr Alan at RM1.1 million. Mr Alan is engaged to work on this deal with 3% agency commission. The owner is Ms Janice who is agreeable to sell it at a negotiated sale price of RM1 million.

This warehouse was acquired by her late father years ago with a loan. It was RM300,000 with 80% loan from a local bank. Other costs of acquisition included lawyer fee of RM4,000, stamp duty of RM5,000 and other handling charges by an estate agency firm amounting to RM3,000. This warehouse was later on damaged due to fire from a neighbouring factory. Luckily, there was a compensation from the neighbouring factory of RM50,000. It continued to be used in good condition for another few years before Janice's father decided to cease operation due to old age. Just last year, it underwent a major facelift at RM180,000. It was initially intended to relaunch new business under Janice's stewardship. Hence, it was transferred to Ms Janice, who is the youngest daughter, as a gift. However, now Janice is moving overseas and selling it to MrLaw at RM1 million.

(a) Calculate the stamp duty incurred on the transactions. 10 marks

(b) Calculate RPGT incurred for Ms Janice. 10 marks

(c) If Ms Janice inherited the warehouse after the death of her father, what could be different in your treatment of (a) and (b). 5 marks.

(M2022-1 Q2, 25 marks)

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