What is RPGT?
Real Property Gains Tax (RPGT) is form of tax in Malaysia that is payable when a property is sold. Simply put, when a property is sold, a tax is chargeable on the profit gained from it and the seller has to pay it to the Inland Revenue Board. This tax is called Real Property Gains Tax (RPGT). It is only applicable to the seller.
Whether it is from a Malaysian citizen to a foreign resident, an employed person to a retired officer – no matter who you are, you will be counted for RPGT when you sell a property in Malaysia at a profit.
RPGT Rate
How is RPGT calculated?
There is a simple formula of the RPGT payable.
Chargeable Gain = Sale Price – Purchase Price - Deductible Expenses
Net Chargeable Gain = Chargeable Gain - Exemption Waiver
RPGT Payable = Net Chargeable Gain x RPGT Rate
What are Deductible Expenses?
Any incidental costs incurred in disposing of the property can be deducted from chargeable gain to calculate RPGT:
Legal fees, accounting fees, surveyor's fee, etc
Real estate agent's Professional Fee (commission)
Administrative fees
Repair or renovation to maintain or upgrade the property such as interior design (tax invoice and receipts are required to substantiate the deduction)
Cost of preserving or defending one's title to, or to a right over the asset
Cost of advertising to make the disposal
What are the Exemption Waiver?
There are additional exemptions you can apply to further reduce RPGT, some of the more common ones are:
Exemption on gains from the disposal of one private residential property once-in-a-lifetime to an individual Malaysian citizen or permanent resident (please utilise this once in lifetime opportunity wisely).
Disposal of real estate assets by the way of Gifts between family members (e.g. husband and wife; parents and children; grandparents and grandchildren) are fully exempted, provided the donor is a Malaysian citizen.
10% of profits or RM10,000 per transaction (whichever is higher) is not taxable, only for individual.
Low cost, low-medium cost and affordable housing priced below RM200,000 will be exempted from RPGT. Only available to Malaysian citizens.
Example 1:
Jane is a Malaysian citizen. She purchased a house in 1 January 2014 for RM500,000. She sold the house in 1 March 2019 for RM700,000. She incurred RM25,000 in legal fees and agent fees.
The calculation for RPGT is as per follows:
Chargeable Gain = Sale Price - Purchase Price - Deductible Expenses
= RM700,000 - RM500,000 - RM25,000
= RM175,000
Net Chargeable Gain = Chargeable Gain - Exemption Waiver (RM10,000 or 10% of profits whichever is higher)
= RM175,000 - RM17,500
= RM157,500
RPGT Payable = Net Chargeable Gain x RPGT Rate
= RM157,500 x 5% (more than 5 years of holding)
= RM7,875
Budget 2020
It has been proposed in Budget 2020 that the determination of acquisition price of a property that was acquired prior to year 2000, can be amended to the market value of the property as of 1 January 2013 (it was 1 January 2000 before). The effective date for the disposal is from 12 October 2019. Which means, if an owner acquired a property in 1995 and subsequently sold it in 2020, the determination of the Purchase Price will be the market value of the property as at 1 January 2013, thus reducing the tax payable.
Note that this matter is still in parliamentary approval stage, no official gazette has yet been reached.
Disclaimer: the above serves as a general knowledge only and in no way represents a financial advice. Please consult your accountant if in doubt.
Thinking to sell your property in Malaysia? We are expert in selling and renting out properties. Click here to leave your details and one of our team members will contact you.
留言