Case Study: Why a Hong Kong Buyer Almost Paid for the Wrong Structure

A Hong Kong-based client, let’s call him Client F, came to me already convinced. He had read that buying through a company saves tax, and he wanted to incorporate before we had even shortlisted a unit. Here is why we talked him out of it.

His plan

One property, held long term. Before choosing the unit, he wanted to set up a Malaysian Sdn Bhd to own it.

What the numbers showed

	Through a company	In his own name
Set-up	Incorporation costs	None
Every year	Company secretary, audited accounts, tax filings	Personal tax filing on rental income only
Local director	Needs a Malaysia-resident director	Not needed
RPGT on a long hold	10% from year 6	10% from year 6
Foreign-buyer rules	Still a foreign buyer if foreign-owned	Foreign buyer

For one property held long term, the tax saving he expected barely existed: a company and a foreign individual both pay 10% RPGT after five years. Meanwhile the company added set-up costs, yearly compliance fees and a local director in his structure.

The other supposed benefit, buying below the foreigner price threshold, did not apply either. His target units were already above RM1 million. And a company owned by a foreigner is treated as a foreign buyer anyway.

The outcome

Client F bought in his personal name. He saved the incorporation cost, skipped the annual filings and kept full control, with no nominee director in the picture.

The lesson

The right structure depends on your actual numbers, not on what worked for someone else. A company can make sense for a portfolio or a business use. For one long-term home or investment, it often just adds cost. The full comparison is in Buying Malaysian property through a company.

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Thinking of incorporating before you buy? Let’s run your numbers first. It is the check I do before anyone sets up a company.

Client details are anonymised. General information, not legal or tax advice. By Jason Lim (REN 84424, IQI Realty Sdn. Bhd. E (1) 1584/6).