Guide to Malaysian Real Property Gain Tax (RPGT)

It is important for every property investor investing in Malaysia property to understand the Malaysian Real Property Gain Tax, as it will affect the Return on Investment (ROI) of their property investment.

The table below illustrates the RPGT for the year 2010 till 2020:

RPGT is a tax on Capital Gain (if any), that the property buyers either by individual or company have to pay when they dispose their real property or shares in a real property within the time frame stipulated.

For example: if they dispose the property on the 1^st to the 3^rd Year of the Sale and Purchase Agreement date, they have to pay 30% RPGT on the Gain only. In other words, Zero Gain – Zero Tax.

FREQUENTLY ASK QUESTIONS

1. What is the expenses deductible for RPGT calculation?

The expenses deductible from the property gain are as follows:

Permitted Expenses:

Property Enhancement Cost (Renovations)
Legal Fees in defending Title

Incidental Costs:

Agent’s Commission
Legal Fees
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2. Who has to pay RPGT?

All property buyers either individual or company with a Capital Gain on their property disposal.

3. Is RPGT applicable for all Property purchased?

Yes, based on Budget 2019 and 2020, all gains obtained after 6^th years of the Sales & Purchase date shall have a capital gain tax of 5% for citizen/PR and 10% for non-citizen/Non-PR and companies.

4. What is the base year valuation for property purchased 6 years before January 2020?

Property price shall be based on market value as at 1^st January 2013;

5. How can I pay RPGT?

For locals and permanent residents who sell off a property, their appointed solicitor will retain 3% of the property’s selling price when the purchaser pays the first deposit to buy the property for the purpose for RPGT payment. On the hand for non-citizens & foreigners, the retention rate is 7% of the property’s selling price.
The seller’s solicitor will make the payment to Inland Revenue Board within sixty (60) days from the date of the sale and purchase agreement to meet the RPGT payable. Failing which a penalty of 10% of the RPGT payable shall be chargeable.

6. What are the exemptions to RPGT?

Exemption shall be given on gains from the disposal of one private residential property once in-a-lifetime to an individual (it is always advisable to utilize for the property with the most gain).
Exemption shall be given on gains arising from the disposal of real property between family members (e.g. husband and wife; parents and children; grandparents and grandchildren).
For 10% of profits OR RM10,000 per transaction (whichever is higher) there shall be no tax payable.

Low cost, low-medium cost and affordable housing priced below RM200,000 will be exempted from RPGT.

CASE SCENARIO:

Buyer purchased a house 20 years ago for RM200,000, now he wants to sell it at RM600,000. Based on Budget 2020, the base value for calculation shall be based on market value in 1^st January 2013. Let’s say the market value is RM400,000. Thus, to calculate the taxable gain we minus the price RM600,000 by the market value price on 1^st January 2013 of RM400,000 and any miscellaneous cost, let’s say we incurred a miscellaneous cost of RM5,800 ie; solicitor SPA fees. The calculation shall be as below:

RPGT CALCULATION:

Gross Chargeable Gain = Disposal Price – Market Value Price as at 1^st January 2013 – Miscellaneous Costs
= RM600,000-RM400,000 – RM5,800 (SPA LEGAL FEES)

= RM194,200

Less: Exemptions

Net Chargeable Gain = Gross Chargeable Gain – Exemption

= RM194,200 – RM10,000 per transaction

= RM184,200

RPGT payable = Net Chargeable Gain x RPGT Rate (based on disposable period)

= RM184,200 X 5% (rate for 6^th Year Thereafter)

= RM9,210

Contributed by: Felix Ng