Real Property Gains Tax (“RPGT”) is administered by Inland Revenue Board of Malaysia (“IRBM”) under the Real Property Gains Tax Act 1976 (“RPGTA 1976”). It is a property related tax that is chargeable on the gains arising of profit gained from disposal of a real estate property.
There is a chargeable gain if the disposal price exceeds the acquisition price. To avoid confusion, this simply means when the resale price is higher than the purchase price.
However, it shall be noted that the Malaysia government provides a tax relief in which the disposal price is deemed equal to acquisition price, or that when an individual suffers a loss from the property sold.
Apart from Malaysian citizens, RPGT applies to foreigners and companies whenever they realise a profit gain from the disposal.
RPGT Rates
To calculate the Real Property Gains Tax (RPGT) amount, you need to follow these steps:
First Step: to determine your chargeable gain.
Determine the Disposal Price: This is the price at which you sell the property.
Calculate the Acquisition Cost: This includes the initial purchase price of the property, plus any additional costs such as legal fees, stamp duty, renovation costs, or other related expenses.
Compute the Chargeable Gain: Subtract the Acquisition Cost from the Disposal Price to find the chargeable gain.
To simplify: –
• Property Sale Price – Property Purchase Price = Net Chargeable Gain
Second Step: Compute the RPGT Amount: Multiply the chargeable gain by the RPGT rate to calculate the RPGT amount.
To simplify: –
• Net Chargeable Gain x RPGT Rate = RPGT Payable Amount
Let’s apply this in a scenario:
Jane, a Malaysian Citizen, purchased a property for RM500,000.00 two years ago. She sold it for RM800,000.00.
• Her Net Chargeable Gain will be determined as: RM800,000.00 – RM500,000.00 = RM300,000.00.
Jane’s RPGT Rate will be 30% in this case as she disposed her property within three years after she first purchased the property.
Jane’s RPGT will then be determined in this method:
• RM300,000.00 X 30% = RM90,000.00
Tax Reliefs: Exemptions
Malaysia offered several exemptions for the RPGT. These exemptions and concessions were subject to specific conditions, and it is advised to visit the official website of LHDN for latest information.
1) Exemption is granted on the profit gained from disposal of a private residence. It is granted for a private residence only.
• An individual can claim this exemption only once during their lifetime. The individual must be a Malaysian citizen or Malaysian permanent resident.
• The exemption must be made in writing and is irrevocable. There will be no other further exemption given for the disposal of other private residences.
2) Disposal of the whole share owned by individual – an amount of ten thousand ringgit or ten per cent of the chargeable gain, whichever is greater.
3) The exemption on gains applies when a property is transferred within the family, involving relationship such as between husband and wife. Transfer between siblings is excluded.
Procedures For Submission of Real Property Gains Tax Form
Disposer and acquirer are required to submit Real Property Gains Tax (RPGT) Forms:-
Disposer
Acquirer
Procedures and forms may change over time, it is advisable to visit the official website of LHDN (https://www.hasil.gov.my) for the most up-to-date information.
You may submit the CKHT 1A or CKHT 1B / CKHT 2A / CKHT 3 form together with relevant documents to your nearest IRBM office. Alternatively, you may submit the form to the e-CKHT website at MyTax via https://mytax.hasil.gov.my/.
This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.
About the author Chai Hui Wen
Associate
Real Estate
Halim Hong & Quek [email protected]
Real Property Gains Tax (RPGT) in Malaysia
Introduction to Real Property Gains Tax
Real Property Gains Tax (“RPGT”) is administered by Inland Revenue Board of Malaysia (“IRBM”) under the Real Property Gains Tax Act 1976 (“RPGTA 1976”). It is a property related tax that is chargeable on the gains arising of profit gained from disposal of a real estate property.
There is a chargeable gain if the disposal price exceeds the acquisition price. To avoid confusion, this simply means when the resale price is higher than the purchase price.
However, it shall be noted that the Malaysia government provides a tax relief in which the disposal price is deemed equal to acquisition price, or that when an individual suffers a loss from the property sold.
Apart from Malaysian citizens, RPGT applies to foreigners and companies whenever they realise a profit gain from the disposal.
RPGT Rates
To calculate the Real Property Gains Tax (RPGT) amount, you need to follow these steps:
First Step: to determine your chargeable gain.
• Property Sale Price – Property Purchase Price = Net Chargeable Gain
Second Step: Compute the RPGT Amount: Multiply the chargeable gain by the RPGT rate to calculate the RPGT amount.
• Net Chargeable Gain x RPGT Rate = RPGT Payable Amount
Let’s apply this in a scenario:
Jane, a Malaysian Citizen, purchased a property for RM500,000.00 two years ago. She sold it for RM800,000.00.
Jane’s RPGT Rate will be 30% in this case as she disposed her property within three years after she first purchased the property.
Jane’s RPGT will then be determined in this method:
Tax Reliefs: Exemptions
Malaysia offered several exemptions for the RPGT. These exemptions and concessions were subject to specific conditions, and it is advised to visit the official website of LHDN for latest information.
1) Exemption is granted on the profit gained from disposal of a private residence. It is granted for a private residence only.
2) Disposal of the whole share owned by individual – an amount of ten thousand ringgit or ten per cent of the chargeable gain, whichever is greater.
3) The exemption on gains applies when a property is transferred within the family, involving relationship such as between husband and wife. Transfer between siblings is excluded.
Procedures For Submission of Real Property Gains Tax Form
Disposer and acquirer are required to submit Real Property Gains Tax (RPGT) Forms:-
Disposer
Acquirer
Procedures and forms may change over time, it is advisable to visit the official website of LHDN (https://www.hasil.gov.my) for the most up-to-date information.
You may submit the CKHT 1A or CKHT 1B / CKHT 2A / CKHT 3 form together with relevant documents to your nearest IRBM office. Alternatively, you may submit the form to the e-CKHT website at MyTax via https://mytax.hasil.gov.my/.
This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.
About the author
Chai Hui Wen
Associate
Real Estate
Halim Hong & Quek
[email protected]