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Premium for land alienation

premium for land alienation in taxation

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Premium for land alienation

  1. 1. PREMIUM FOR LAND ALIENATION SGHL 2153 : TAXATION Hairul Amirul bin Harun B15GH0073 Khairul Akhmal bin Abdul Rahman A14GH0156 Nurul Atikah bt Arifin B15GH0049 Nursyuhadah bt Bahari A14GH0151 Nurul Amira bt Fadzilah A14GH0107 Noraihan bt Mohd Razali A14GH0073 Siti Zahrah bt Aminuddin B15GH0057 Phoon Yin Yi B15GH0052 Norhedayah bt Hamzah A14GH0159
  2. 2. • Disposal / alienation • State Authority have powers to dispose land which is divided into 2 categories: a) Disposal of alienation • Freehold • Proprietary lease b) Disposal other than alienation • Reserve Land • Temporary Occupancy Licence • Permit to Extract , Remove and Transport Rock Material • Use of Airspace INTRODUCTION 2
  3. 3. • when the state authorities agreed to to alienate them completely, the applicant must pay as follows: a) an annual tax for the first year b) premium c) fees for surveyor land d) payments related to the preparation and registration of documents
  4. 4. WHAT IS LAND PREMIUM? LAND PREMIUM IS THE AMOUNT OF MONEY IN THE FORM OF PREMIUM TO BE PAID TO THE LAND AUTHORITY IN THE EVENT OF THE APPLICATION FOR : CHANGE OF AND USE /CONVERSION SUBDIVISIONAMALGAMATION PREMIUM Lump sum paid by the lessee to the State Authority to extend the lease FURTHER PREMIUM Charge on approval of variation for : • Change category of land use • Annulled the conditions TYPES OF LAND PREMIUM LAND ALIENATION
  5. 5. CONVERSION OF AGRICULTURAL STATUS TO ANOTHER AGRICULTURAL STATUS To: • Rubber- <= 4 hectares (RM 75.00) • Rubber- > 4 hectares (RM 124.00) • Palm Oil Tree and Cocoa - <= 4 hectares (RM 99.00) • Palm Oil Tree and Cocoa - > 4 hectares (RM 149.00) • Coffee, coconut and tea- (RM 50.00) • All types of Plantation and Fruits- (RM 75.00) • Rice Plantation (RM 37.00 per hectare) • Animals (RM 99.00 per hectare)
  6. 6. CALCULATION OF LAND PREMIUM FOR BUILDING (RESIDENTIAL) EXAMPLE 1 •Premium for residential land: Determine the premium of bungalow land with 99-year leasehold interest expiring on 2060 if the owner want to extend the lease for another 99 years on 2011. The market value of land is RM400,000. 1/2 x 1/100 x RM400,000 x 49 years = RM98,000 1/2 x 1/100 x value of land x (term of new lease – balance of existing lease)
  7. 7. CALCULATION OF LAND PREMIUM FOR BUILDING (RESIDENTIAL) EXAMPLE 2 •Further premium for conversion from Agricultural Land to Building Land: •The rate of land premium : 15% of Current Market Value (CMV) Developers Maju Sdn Bhd has applied to change the category of their land from agriculture to residential use. The current market value of the agriculture land is RM1,000,000 which located in Kuala Selangor. When the application approved, the market value of that conversion land (residential) increased to RM2,000,000. How much that developer should pay the further premium if their application approved? RM2,000,000 x 15% = RM300,000 So, the further premium that the developer should pay is RM300,000.
  8. 8. ADDITIONAL PREMIUM FOR BUILDING (RESIDENTIAL) •Additional premium is the charges imposed towards development in excess of the provision which were agreed between the payer premium and land administrator. Bil. Residential Per Plot 1. Low Cost House RM100 2. Terrace House 2.1 Single Storey 2.2 Double Storey 2.3 For Each Additional Storey RM150 RM250 RM100 3. Semi Detached House 3.1 Single Storey 3.2 Double Storey 3.3 For Each Additional Storey RM250 RM350 RM200
  9. 9. ADDITIONAL PREMIUM FOR BUILDING (RESIDENTIAL) Bil. Residential Per Plot 4. Market, High Rise Apartment (Low Cost) and Flat (Low Cost) 4.1 A plot with an area below 500 sq metre 4.2 A plot with an area of 501 – 1,000 sq metre 4.3 A plot with an area of 1,001 – 2,001 sq metre 4.4 A plot with an area of 2,001 – 3,000 sq metre 4.5 A plot with an area of 3,001 sq metre and above RM1,500 RM2,000 RM3,000 RM4,000 RM5,000 Plus RM1,000 for every 500 sq.
  10. 10. • Number of premium = 20% of the difference in the market value before and after the variation. • FORMULA: 3 × 1 × value of land × (term of new lease-balance of existing lease) 4 100 • The calculation of the additional premium is based on the State Land Rules. The basis and rates of premium different between the respective states in Malaysia. A market value has to be determined first in order to calculate the premium of the industrial land. INDUSTRIAL LAND
  11. 11. 99 year leasehold interest expiring on 2069. If the owner want to extent the lease for another 99 years on 2015. The calculation will be: The market value is RM7,000,000 Market value before variation = RM 5,000,000 Value of land = RM 7,000,000 – RM5,000,000 = RM 2,000,000 x 0.20% = RM 400,000 CALCULATION
  12. 12. 1970 2015 2069 2114 99 years 99 years Formula: 3 × 1 × value of land × (term of new lease-balance of existing lease) 4 100 3 x 1 x RM 400,000 x 54 years 4 100 Premium paid = RM 162,000.00
  13. 13. CONCLUSION Amount of money in premium to be paid to the L.O Source of income of state government Different premium for each state Premium for each category (agricultural, residential and industrial) are different Determine market value to calculate the premium Higher market value, higher premium

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