Not entirely unexpected, Johor state government said it would raise tax rates for foreigners owning properties there by end 2013. It is not likely to be substantial and definitely as chilling as Singapore’s property cooling measures.

Currently, property owners in Johor pay two tranches of property tax. The first is an assessment tax of up to 6 per cent per annum, based on the annual rental value of the property. This could raise to 10%. They also pay a second component known as a quit rent of one to two sen per square foot annually. In comparison, an annual property tax of 10 per cent of the estimated annual rental value applies in Singapore, with lower tiered rates of zero to 6 per cent for owner-occupied homes.

According to Johor state’s Chief Minister, the tax rates will go up on about 130,000 foreign property owners, of which 90 per cent are Singaporeans. Currently, foreigners can only buy properties above RM500,000 (S$202,400) in Johor.

I’ve been to the Iskandar region and I must say I’m pretty impressed by the roads and pace of development. Still, I maintain that there is no active resale market in that area and investors should be prepared to stay over in Iskandar should there be no ready tenants. Also, agents marketing properties across the causeway may not want to tell you that there is a Real Property Gain Tax (RGBT) of 15% on any property sold in the first two years, and 10% on the third to fifth year!

Be Savvy and do your due dilligence!