Real Property Gains Tax (RPGT) In Malaysia

Real Property Gains Tax (RPGT) is a form of Capital Gains Tax that is imposed on the disposal
of property in Malaysia. It was suspended temporarily in 2008-2009, and reintroduced in
2010. In 2014, RPGT was increased for the 5th straight year since 2009. So how is it
calculated, and what does it impact?
Based on the Real Property Gain Tax Act 1976, RPGT is a tax on chargeable gains derived
from disposal of property. A chargeable gain is the profit when the disposal price is more
than purchase price of the property. What most people dont know is that RPGT is also
applicable in the procurement and disposal of shares in companies where 75% of their
tangible assets are in properties, a.k.a. Real Property Companies (RPC). RPGT applies to both
residents and non-residents.
You will be only be taxed on the positive net capital gains which is disposal price less the
purchased price less the miscellaneous charges such as;( stamp duty, legal fees,
advertisement charges ,etc). Additionally, a waiver on the taxable amount is granted to
individuals (but not companies). The holding period is from the date on the S&P agreement
till to the disposal date. For a simple and a quick calculation, the formula is;
Chargeable Gain = Disposal Price - Purchased Price
Net Chargeable Gain
= Chargeable gain - Exemption Waiver (RM10,000 or 10% of Chargeable Gain,whichever is
higher)
Tax payable = RPGT rate (based on holding period)* Net Chargeable Gain
RPGT Exemptions
Good news! There are exemptions allowed for RPGT. Among the exemptions are:
1) Exemption on gains from the disposal of one residential property once in a lifetime to
individual (Please utilize this once in lifetime opportunity wisely!)
2) Exemption on gains arising from the disposal of real property between family members
(e.g. husband and wife, parents and children and grandparents and grandchildren)
3) 10% of profits OR RM10,000 per transaction (whichever is higher) is not taxable



Budget 2014

Accordance with the Budget 2014 announcement, the rates for RPGT has been increased.
Governments reason for the hike is mainly to reduce speculative activities on housing prices
and real estate market. Government believes that hiking up RPGT enable the Rakyat to
purchase affordable new houses. However in long term, hike in RPGT rates will slow down
the sales of the secondary markets (sub-sales) and also might reduce property investments
by local and foreign property investors. The following is the RPGT rates effective from 1st
January 2014.