People make money from property in two ways: keeping units that earn rent, or buying and selling for a gain. Many first-time buyers stretch for a dream house, assuming any property is an asset.
What makes a property an asset rather than a liability, and how do traders and investors differ?
“assets are things that will bring money into your account every month”
Following Rich Dad Poor Dad, Sean counts a property as an asset only if it puts money into your account each month; one that takes money out is a liability, which is why a dream home makes a poor first property. Investors buy and keep for rent; traders buy and sell for capital gains, and must play by the tax rules.
Why
Small surpluses add up
A RM500,000 apartment on a 30-year loan costs about RM1,500 a month including maintenance; if it rents for RM1,800, you keep about RM300. Several such units build a monthly income.
Declared rent helps you borrow
Rental income you declare to the tax department counts as income, which can support further loans.
Traders live by the RPGT rules
When RPGT was waived after the 2008 crisis, traders flipped freely. By 2017, selling a home within a year meant 30% tax on the gain, and none after five years for residential property.
What to do
- Work out whether each property adds to or drains your monthly cash flow.
- Avoid making a cash-draining dream home your first purchase.
- Declare rental income so it counts toward future loans.
- Check the current RPGT rates and your holding period before planning to sell.
- Keep receipts for renovations, which can reduce the taxable gain.
Editorial Note: Summarised from Sean Tan's full episode. The quoted answer is in his own words; the rest is our paraphrase. Figures reflect the recording date, so check current rates and rules before acting on them.
PROPERTY TRADERS VS INVESTOR
Sources & Verification Data
Summarised from Sean's English captions for this August 2017 video, which draws on Robert Kiyosaki's Rich Dad Poor Dad. The quoted line is verbatim; everything else is paraphrased. His remarks on agents' commission rates are left out.
