It is very common for investors to purchase property solely for investment reasons as it is considerably safe and brings higher yield, nonetheless this depends highly on the geographical location of the said property. It is usually deemed a long-term commitment compared to other types of investments. Other types of investments, like fixed deposits, gold or bonds, are comparatively less risky in nature. These types of investment usually have guaranteed rates of return. The returns are higher than regular savings accounts, and the funds will be locked away with the bank for a specific period as agreed – – the longer the tenure, the higher the returns.

As opposed to the popular notion, opting to invest in property is quite the secure choice to consider, in comparison to something which is more erratic, like the stock market. Let’s understand the advantage of having an investment holding company for properties and real estates.

Significant Reasons

• Traditionally in real estate, your risk of loss is reduced by the duration of time you hold on to your property. When the market enhances, so does the worth of your home, and consequently, you develop equity. However, in the stock market, the risk never alters and there are various factors beyond your control which can negatively affect your investment. Real estate offers more authority of your investment as your property is a tangible asset which you can leverage to capitalise on various revenue streams and enjoy the capital appreciation at the same time.
• There will always be worth in your land, and worth in your home. Other investments can leave you with little to no tangible asset value like a stock that can dip to zero, or a new car which falls in worth over time. Home-owners insurance will secure your investment in real estate, do ensure to get the best policy accessible so your asset is safeguarded in the worst-case situation.
• Historically, it is evident that the longer you hold onto your real estate, the more profitable it gets. The property market has always recovered from past scenarios which caused home appreciation to slip, and for those who held on to their investments in those dubious times, prices have gone back to normal, and appreciation is on track. Now, real estate investors in the top performing markets are enjoying the perks.
• If you’ve ever discussed with a financial planner about investing, then you must be aware of the significance of diversification. When you diversify your portfolio, you disseminate out the threat. Real estate will always aid as a safe tangible asset to alleviate the threat in your portfolio. Many have garnered wealth by purely investing in real estate.
• You can possibly get tax reductions on mortgage interest, cash flow from investment properties, operating expenses and costs, property taxes, insurance and depreciation (even if the property gains value) and other advantages depending on your tax jurisdiction. The end of the year is a very hectic time for real estate as people want to avail profits of the various tax benefits prior the end of the year. Having an offshore structure ie in Labuan for investment purposes offers a spectrum of tax benefits, especially for properties or real estates located worldwide.

Benefits for Foreigners to Invest in Malaysian Properties

• Direct foreign ownership allowed in Malaysia
• Security in legal ownership with title document
• Can own landed property
• Can own freehold properties
• Can own unlimited number of properties
• Low entry points; only MYR 1 million to own a property
• Freely allow to sell anytime in the open market
• Foreigners can purchase bulk units, buildings, hotels, lands and projects
• Foreigners can invest in auction properties
• No capital control and repatriation restriction for property investment and gains
• No inheritance taxes
• Liberal property financing for foreigners under the MM2H programme
• Real Property Gain Tax after 5 years is only 5%
• Legal fees, stamp duty and reimbursements payable for purchase and selling for foreigners is the same as local Malaysians
• All properties with value lower than MYR 10 million does not require Foreign Investment Committee approval.

Recommended Blogs: How to Setup an investment holding company in Malaysia

Labuan Island has been designated by the Malaysian Federal Government as the tax-saving sanctuary for international businesses which targets to be the world-renowned mid-shore international financial centre. All Labuan companies can enjoy the benefits of a ‘mid-shore’ jurisdiction by setting up their marketing office in the capital city of Malaysia, Kuala Lumpur and Iskandar Malaysia which is located in the south of Malaysia near the Singapore border (or any preferred cities in Malaysia). This serves as an advantage for corporations that wish to tap into Malaysia’s talent pool as well as for other marketing purposes.

Recommended Blogs: Labuan Foundation for Real Estate Investment

 Setting up a trading company in Labuan jurisdiction is an ideal choice as it offers a wide range of business activities permissible under the regulation of Labuan Financial Services Authority. Additionally, Labuan jurisdiction being a mid-shore jurisdiction, offers the provision of dealing with the local market which is subjected to the local tax regime. With this advantage, more business opportunities and flexible trading methods are generated for foreign and local owners.

Contact our QX Trust consultants at +60 3 9212 6940 or consultant@qx-trust.com to understand in detail about real estate investment via Labuan.