What is RPGT?
Real Property Gains Tax also known as RPGT, is a form of Capital Gains Tax that is chargeable on the profit gained from the disposal of real property in Malaysia.
In simple words, RPGT is basically the tax on chargeable gains derived from the sale of your land or a property. While a chargeable gain is the profit that you make for selling a property at a higher price than purchase price.
For instance, you bought a property in 2006 at RM 500k. Few years later, you sold the property to others at RM 700k, so, you gaining a RM 200k profit from selling the property. Then you will be taxed of your RM 200k profit.
How a RPGT calculated?
The property owner is the one who will be taxed on the net chargeable gains (RM 200k is only your gross chargeable gains). To get your net chargeable gains, you need yo subtract the miscellaneous charges such as legal fees, stamp duties, administrative fees and etc. Additionally, every Malaysian are entitled to get tax exemption only once in an individual life time, but, this exemption is only applicable for the disposal of a “private residence”.
It is depends on the ownership of a property period or holding period prior to its sale (from the date on the S&P Agreement till to the disposal date). Here is the simple formula calculations of RPGT;
|Chargeable Gain||Disposal Price – Purchased Price|
|Net Chargeable Gain||Gross chargeable gain (your profit) – Exemption Waiver(RM 10k or 10% of chargeable gain)|
|Tax payable||RPGT rate (based on the years of property ownership) x Net Chargeable Gain|
What is the RPGT Rates In Malaysia?
The effective RPGT rates are as follows:
|Disposal of property||Malaysia citizen & PR)||Non-Citizens & Non-PR||Companies|
|Disposal within 3 years from the date of property purchase||30%||30%||30%|
|Disposal in 4thyear||20%||30%||20%|
|Disposal in 5thyear||15%||30%||15%|
|Disposal in 6thyear and subsequent year||0%||5%||5%|
**Above RPGT Rates in Malaysia as of Budget 2014
In the announcement of Budget 2014, every property owners have to pay RPGT at a 30% for properties sold within 3 years or less, 20% for properties disposed within 4 years and 15% for properties disposed in 5 years. Good news is, 0% RPGT rate for the properties over 5 years was kept as it is.
For those property owner who want to avoid to paying Real Property Gains Tax, this is the smartest and only the way is to sell out your property after 5 years of ownership.