Rahim, a real estate agent, bought a unit of condominium for RM850,000 in August 2018 in...

 

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Rahim, a real estate agent, bought a unit of condominium for RM850,000 in August 2018 in X City which, according to rumours among people in the property industry, will be built a new Light Railway Transit (LRT) route. He planned to give it as a surprise birthday present to his wife, and make it their family home. Immediately after purchase, he spent another RM100,000 to renovate and beautify the unit, including a modern kitchen with stainless steel kitchen appliances, white kitchen cabinet and granite countertop, hardwood flooring, air-conditioner in the living room and bedrooms, plaster ceiling, and a master bathroom with double vanity and new jacuzzi. The renovation was completed in December 2018, just before his wife's birthday. Unfortunately, before they could move into the condominium unit, the couple went into a fight which ended with Rahim divorced his wife. Heartbroken, Rahim decided to sell the property. In January 2019, the government announced the plan to build a new LRT route in City X. Subsequently, the price of properties in the area went up. Rahim managed to sell the condominium unit in March 2019 for RMI,200,000. This is the first time Rahim sold his own property throughout his 15 years' service as a real estate agent. Required: With reference to the badges of trade, lay out your arguments to support and to oppose that the gain made by Rahim on the sale of the condominium unit is chargeable to income tax. (8 marks) Rahim, a real estate agent, bought a unit of condominium for RM850,000 in August 2018 in X City which, according to rumours among people in the property industry, will be built a new Light Railway Transit (LRT) route. He planned to give it as a surprise birthday present to his wife, and make it their family home. Immediately after purchase, he spent another RM100,000 to renovate and beautify the unit, including a modern kitchen with stainless steel kitchen appliances, white kitchen cabinet and granite countertop, hardwood flooring, air-conditioner in the living room and bedrooms, plaster ceiling, and a master bathroom with double vanity and new jacuzzi. The renovation was completed in December 2018, just before his wife's birthday. Unfortunately, before they could move into the condominium unit, the couple went into a fight which ended with Rahim divorced his wife. Heartbroken, Rahim decided to sell the property. In January 2019, the government announced the plan to build a new LRT route in City X. Subsequently, the price of properties in the area went up. Rahim managed to sell the condominium unit in March 2019 for RMI,200,000. This is the first time Rahim sold his own property throughout his 15 years' service as a real estate agent. Required: With reference to the badges of trade, lay out your arguments to support and to oppose that the gain made by Rahim on the sale of the condominium unit is chargeable to income tax. (8 marks)