Real Property Gains Tax Guides

1. What is the expenses deductible for Real Property Gains Tax (RPGT) calculation?

The expenses deductible from the property gain are as follows:

Permitted Expenses:

• Property Enhancement Cost (Renovations)
• Legal Fees in defending Title

Incidental Costs:

• Agent’s Commission
• Legal Fees
• Advertisements

Remarks: Official receipt needed from all relevant costs.

2. Who has to pay RPGT?

All property buyers either individual or company with a Capital Gain on their property disposal.

3. Is RPGT applicable for all Property purchased?

Yes, based on Budget 2019 and 2020, all gains obtained after 6th years of the Sales & Purchase date shall have a capital gain tax of 5% for citizen / PR and 10% for non-citizen / Non-PR and companies.

4. What is the base year valuation for property purchased 6 years before January 2020?

Property price shall be based on market value as at 1st January 2013;

5. How can I pay RPGT?

For locals and permanent residents who sell off a property, their appointed solicitor will retain 3% of the property’s selling price when the purchaser pays the first deposit to buy the property for the purpose for RPGT payment. On the hand for non-citizens & foreigners, the retention rate is 7% of the property’s selling price.

The seller’s solicitor will make the payment to Inland Revenue Board within sixty (60) days from the date of the sale and purchase agreement to meet the RPGT payable. Failing which a penalty of 10% of the RPGT payable shall be chargeable.

6. What are the exemptions to RPGT?

Exemption shall be given on gains from the disposal of one private residential property once in-a-lifetime to an individual (it is always advisable to utilize for the property with the most gain).

Exemption shall be given on gains arising from the disposal of real property between family members (e.g. husband and wife; parents and children; grandparents and grandchildren).

For 10% of profits OR RM10,000 per transaction (whichever is higher) there shall be no tax payable.

Low cost, low-medium cost and affordable housing priced below RM200,000 will be exempted from RPGT.

Case Illustration:

Mr Lee purchased a house 10 years ago for RM280,000, now he has disposal it at RM550,000. Based on Budget 2020, the base value for calculation shall be based on market value in 1st January 2013. Let’s say the market value is RM350,000. Thus, to calculate the taxable gain we minus the price RM550,000 by the market value price on 1st January 2013 of RM350,000 and any miscellaneous cost, let’s say we incurred a miscellaneous cost of RM20,000 ie; solicitor SPA fees + renovation. The calculation shall be as below:

RPGT  Calculation:

Gross Chargeable Gain = Disposal Price – Market Value Price as at 1st January 2013 – Miscellaneous Costs

= RM550,000 - RM350,000 - RM20,000 (SPA fees + renovation)

= RM180,000

Less: Exemptions

Net Chargeable Gain = Gross Chargeable Gain – Exemption

= RM180,000 - RM10,000 per transaction

= RM170,000

RPGT Payable = Net Chargeable Gain x RPGT Rate (based on disposable period)

= RM170,000 X 5% (rate for 6th Year Thereafter)

= RM8,500

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