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Real Property Gain Tax (RPGT)

 Malaysia Real Property Gain Tax(RPGT)-2014

With effect from 1 January 2014, the revised RPGT rates for the disposal of real property and shares in real property companies will be as follows:

 

Follow Date from the Sale & Purchase Agreement (SPA) Companies
Individual (Citizen/PR) Individual (Non-Citizen)
Disposal within 3 years
30% 30% 30%
Disposal in the 4th Year 20% 20% 30%
Disposal in the 5th Year 15% 15% 30%
Disposal in the 6th Year & and subsequent years 5% 0% 5%

For disposal of property whereby state consent is required, the date of disposal shall be the date when such conditions have been complied with but not the date of SPA. However, genuine property owners who dispose their property can apply for exemption of RPGT under the following circumstances ie. a) once-in-a-lifetime exemption for Malaysian individuals, b) disposal by way of gift ie between parent and child, husband and wife etc.

Briefly, the computation of RPGT in Malaysia is as follows:-

A) Disposal Price ( LESS allowable expenditure ie. upgrading and improvement costs to maintain or enhance the value of the property and incidental expenditure such as legal fees and stamp duty, agent fees, administration charges etc)

B) Acquisition Price ( ADD incidental costs legal fees, agent fees, administration charges etc)

Taxable capital gains = A-B less RM10,000.00 exemption or 10% of the net gains, whichever is higher for an individual.

 

In standard practice, A 2% retention sum of the disposal price will be retained by acquirer’s solicitor for RPGT purpose and filing of notification of disposal to Board of Inland Revenue of Malaysia is required within 60 days.

 

There are 3 circumstances in which the property seller is exempted from paying RPGT as follows :

1)   Gifts between parent and child; husband and wife; grandparent with grandchild

2)   Transfer of asset between spouses

3)   Disposal of a residential property once in a lifetime


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