With effective from 1st Jan 2010, the Malaysian Government has re-imposed the Real Property Gain Tax (RPGT). The RPGT will be fixed at 5% on the property gains from the date of property disposal. The Real Property Gain Tax for the first year is 5% and applied the same for second, third, fourth and fifth year respectively.
Real Property Chargeable Gains are gains derived from disposal, sell, convey, assign, transfer, settle or alienate whether by agreement or by force of law which fall under chargeable asset. All chargeable assets must be made during the year of assessment and all particulars must be furnished to the Inland Revenue Board of Malaysia as requested.
Example to Illustrate the Calculation of Real Property Gain Tax Payable
Mr Tan bought a 2 storey terrace house on year 2008 at a price of RM 400,000 and sold his property on 1st Jan 2010 at RM 600,000 (this property sold within five years from the date of purchase). He made RM200,000 from the transaction and the gains are subject to 5% RPGT and the calculation will be as follows:
RM 200,000 (Property Gains) – RM 20,000 (Waived Exemption) = RM 180,000 (Taxable Gains)
RM 180,000 (Taxable Gains) x 5% (RPGT Rate) = RM 9,000.00 (RPGT Chargeable)
Thus, the RPGT chargeable to Mr Tan will be RM 9,000.00
There are three circumstances where the property seller is exempted from paying RGPT.
- The level of exemption is increased from RM5,000 to RM10,000 or 10% of the chargeable gains, which ever is the higher
- Gifts between parent and child, husband and wife, grandparent and grandchild; and
- Disposal of a residential property once in a lifetime.