hi everybody, currently i am deciding for my next residential investment property for rent to tenants but am in a bit of a fix as to which choice is a better one, alot of the figures shown are assumed and that to some the gross percentages may be different from what an investor may want, also the cocr is ignored for the moment...

choice 1

kl area, not my hometown, have to fly over, a bit of hassle
decide to stamp thus declare to tax for ability to sue tenants if anything goes wrong as i am not always there.

apartment price 150k
rental = 1000/month 8%gross
= 12000
maintenance = 125/month = 1500
interest paid to bank = 0 because using flexi and maxed it out

tax declaration = 12000-1500 = 10500 (i know there are other costs that can deduct but lets assume...)
assume tax bracket 24% = pay extra 2520
overall result = 12000-1500-2520 = 7980 cashflow


choice 2

hometown area, can drive over easily
decide not to stamp/declare tax because can fix myself easily if anything goes wrong

apartment price 150k
rental = 790/month 6.32%gross (rental not so good as compared to kl)
= 9480
maintenance = 125/month = 1500
interest paid to bank = 0

tax dont declare
overall result = 9480-1500 = 7980 cashflow


Assuming that the availability of tenants are the same for both cases would you choose to have a legal rental but the location is very far (choice 1) or would you rather have a property that is near (choice 2) but decide not to declare tax for it so that the cashflow could be the same? your comments will be appreciated.

cashflow is the same. potential for kl to boom is higher. also, are you cool with doing jail time for tax evasion?

if it's RM2,520,000 can consider lah

kl area, not my hometown, have to fly over, a bit of hassle

When first stating out, go for properties nearby.
Best if you can drive to within 10 min.



decide to stamp thus declare to tax for ability to sue tenants if anything goes wrong as i am not always there.

LOL. You don't sue tenants, you evict them.
Also when you're not there, how would you sue them?



decide not to stamp/declare tax because can fix myself easily if anything goes wrong

If it does goes wrong, you'll have a new boyfriend sleeping with you everynight.



In properties, you can pay 0% tax. Go ask someone smarter about this.

yeah it is tax evasion. on reflection it is common for people to not report for tax if the house was rented out on a room basis and the owner lives in the house also, but most people will report to tax if the house was rented out wholly. the amount of course is pitiful compared to 2.5mil

ok its not sue tenants but to evict them..
if things does go wrong and the property bought is somewhere near at least something could be done compared to a far away place. however this property cannot produce such a high rental yield thus the consideration of evading tax which to most is not such a good idea...
it probably is easier to achieve a 0% tax if the rentals were considered as a business income (ie having 4 properties or more, correct me if wrong) but for most of the people me included is still considered as a personal tax treatment. someone willing to share how the 0% can be done?


i guess i am bordering on criminality for suggesting tax evasion, i am sure though that there are individuals that does do it but for an open forum like this they will probably not share the experience...

Play this game professionally.

i prefer to buy kl area property compared to my hometown. the prospect is good.

the yield for kl is generally better than my hometown also, as a personal choice for you having a kl property for higher rent outweighs the inconveniences of it being far away?

if its purely for investment, I wont touch anything beyond KL and Penang properties.

where is your home town??

Yes.. KL will be safer.. as well as Klang Valley, and Penang

JB have potential... if you are willing to buy and hold for longer period

can i know which apartment that u been talking about??

yeah.. distance is an issue. if u have brother or sister in kl, u can ask their favour to look after your house.. as my sister do. she is in kuantan, got an apartment in puchong. she ask for my kindness (ehem ehem) to show the house to expected tenants and all procedural things.

I will not touch anything beyond KL. Penang rather risky now and so JB.

i see, i suppose i just have to accept the inconveniences and get the kl properties...
my hometown is in east malaysia sabah, flying over by airaisa once in a while may be a bit of a hassle but its a small price to pay lor, i dont think i will go for jb, i would rather have all my other investment properties consolidated in an area ie kl so no need to fly so much
i havent aimed at which apartment yet specifically as i have to decide on which town/city to go for first, if u got a suggestion i am all ears
i got a sis living around sunway and may be able to help in the future, i just have to treat her to a nice meal once in a while....
why is that so boss? keithcky, i read in another thread reply by you that the lhdn will not be able to trace you easily even if you stamped it, have you ever avoided declaring rental? correct me if wrong

This post has been edited by mouldybread: Feb 4 2009, 09:58 AM