THE proposal to clarify the law on taxing profits from property sales is not a backdoor attempt to impose a capital gains tax or a pre-emptive strike against speculators.

Concerns among property investors and analysts helped to send real estate shares plunging on Wednesday, but Thursday's statement from the ministry sparked a stock rebound.

The MOF said the proposed change is aimed at ensuring that investors are not taxed on any gains made if they do not sell property frequently. It proposes that anyone who sells only one property in any four-year period will not be taxed on any profit. If it becomes law next January, it will provide certainty for owners. At present, they cannot be sure if they will be taxed on any gains, even if they have held the property for four years or more.

The proposal was made in response to public feedback over the years demanding more certainty over the tax treatment property-owning individuals might face, said the MOF.

It is believed to have arrived at the four-year timeframe, after studying the legal precedents on taxing property sale gains over the years.

The proposed tax change does not mean tougher rules in income tax policy for individuals who sell their properties.

Instead, the only proposed change involves assuring individuals who do not sell properties frequently that they will not be taxed on a real estate gain.

The ministry said the proposed change is also not an anti-speculation measure. It does not mean that individuals who have sold more than one property within a four-year period will automatically be taxed.

'There is no change to the current and longstanding income tax treatment in this regard. Whether an individual who sells properties more frequently is subject to income tax depends on the facts and circumstances of each case,' the ministry said.

Read the full story in Friday's edition of The Straits Times.

engyeow@sph.com.sg