【What is Real Property Gain Tax 】
A Real Property Gains Tax (RPGT) is the imposition of tax on your profits from selling a property. In simpler terms, if you own a house and plan to sell it one day, you will have to pay tax to the government for the gains a.k.a profits you’re going to receive.
However, this tax will be imposed only when the disposal or selling price is greater than the purchase price of the property. If you’re not making a profit, you will not be charged RPGT.
This tax must be paid within 60 days of the sale of the property. However, it is advisable to get it done much sooner.
It is important to note that RPGT is not only applicable to residential properties, but also commercial properties, estates, and empty lands. In this article, we’re going to focus on the sale of residential properties.
【How To Calculate RPGT? 】
First, we need to know your chargeable gain amount. Here’s the formula:
Chargeable Gain = Disposal Price (Selling Price of Property) – Purchase Price
After you get the chargeable gain, you can use this formula to calculate your payable tax:
Tax Payable= Nett Chargeable Gain x Tax Rate (Refer to Table in video 2:18)
【Updated Based year in Budget 2020】
Budget 2020 also revised the base year of assessment from 2000 to 2013, changing how your chargeable gain is calculated if your property was bought before the base year. From 1 January 2020, the purchase price of your property is calculated starting from 2013; even if you bought it much earlier.
ou bought your house in 2005 for RM350,000. In 2013, it appreciated to RM600,000 but you decided to hold on to it. Then in 2022 you decide to sell the house for RM800,000.
Due to the base year moving to 2013, your chargeable gain would only be RM200,000. As this is the difference between your Disposal Price and the value of the property in 2013.
【How to Reduce Chargeable Gain】
The first exemption we’ve already applied above – which is 10% of profits OR RM10,000 per transaction. This applies to every transaction you make.
The second way is through allowable cost, for example:
-Legal Fees when you bought and sell the property
-Professional Fees to Estate Agent
-Renovation Cost etc.
【Are there any RPGT reliefs or exemptions I can make use of?】
-There is a once-in-a-lifetime exemption from RPGT for Malaysian. Bear in mind that this only applies to a single transaction across your entire life.
-You’re exempted from RPGT if the disposal of property happens between you and a spouse, between parents and children, grandparents or grandchildren by way of a gift. It will be assumed that you received no gain or suffered no loss from the transaction.
-If you own a medium or low-cost property that is RM200,000 or below, you are also exempted from RPGT when selling.
I hope this guide is helpful for you. If you have any questions about Real Property Gain Tax in Malaysia, you can also seek help from your Real Estate Negotiator or appointed lawyer.
Fell free to get in touch with us if you’re looking to buy/sell a property in Kuala Lumpur. My name is Wen Hsiang, from Fortress Real Estate Sdn Bhd, a real estate agency focus in Kuala Lumpur properties.
Fortress Real Estate Sdn Bhd