PREMIUM FOR LAND ALIENATION

SGHL 2153 : TAXATIONHairul Amirul bin Harun B15GH0073Khairul Akhmal bin Abdul Rahman A14GH0156Nurul Atikah bt Arifin B15GH0049Nursyuhadah bt Bahari A14GH0151Nurul Amira bt Fadzilah A14GH0107Noraihan bt Mohd Razali A14GH0073Siti Zahrah bt Aminuddin B15GH0057Phoon Yin Yi B15GH0052Norhedayah bt Hamzah A14GH0159

• Disposal / alienation• State Authority have powers to dispose land which is divided

into 2 categories: a) Disposal of alienation• Freehold• Proprietary leaseb) Disposal other than alienation• Reserve Land• Temporary Occupancy Licence • Permit to Extract , Remove and Transport Rock Material• Use of Airspace

INTRODUCTION

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• when the state authorities agreed to to alienate them completely, the applicant must pay as follows:

a) an annual tax for the first yearb) premiumc) fees for surveyor landd) payments related to the preparation and registration of documents

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 PREMIUMCharge on approval of

variation for :• Change category of land

use• Annulled the conditions

TYPES OF LAND PREMIUM

LAND ALIENATION

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)

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)

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.

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 Plot1. Low Cost House RM1002. Terrace House

2.1 Single Storey2.2 Double Storey2.3 For Each Additional Storey

RM150RM250RM100

3. Semi Detached House3.1 Single Storey3.2 Double Storey3.3 For Each Additional Storey

RM250RM350RM200

ADDITIONAL PREMIUM FOR BUILDING (RESIDENTIAL)

Bil. Residential Per Plot4. Market, High Rise Apartment (Low Cost) and Flat

(Low Cost)4.1 A plot with an area below 500 sq metre4.2 A plot with an area of 501 – 1,000 sq metre4.3 A plot with an area of 1,001 – 2,001 sq metre4.4 A plot with an area of 2,001 – 3,000 sq metre4.5 A plot with an area of 3,001 sq metre and above

RM1,500RM2,000RM3,000RM4,000RM5,000Plus RM1,000 for every 500 sq.

• 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

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 RM7,000,000Market 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

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 years4 100Premium paid = RM 162,000.00

CONCLUSION

Amount of money in premium to be paid to the L.OSource of income of state governmentDifferent premium for each statePremium for each category (agricultural, residential

and industrial) are different Determine market value to calculate the premiumHigher market value, higher premium