What do you need to know about Real Property Gains Tax

Malaysia’s Real Property Gains Tax (RPGT) refers to the taxes gained from owners who sell off their property. The tax is administered by the Inland Revenue Board of Malaysia and is enforced based on the Property Gains Tax Act 1976 (RPGTA 1976). The main objective of RPGTA 1976 is to lessen activities deemed speculative in the local property market, and it also serves as a revenue-generating tax source.

All residents, including PRs, local as well as non-locals in Malaysia, selling off their property are taxed on the profits gained during the transfer of ownership. Depending on the number of years under the initial owner from the date set in the Sales and Purchase Agreement to the property’s selling date, they would be subjected to varying rates of RPGT.

Exemptions to RPGT?

All property sales will be taxed 10% off the profits or RM10,000 per transaction (whichever is higher in value), except for a few scenarios. Malaysian citizens can transfer their property ownership without RPGT once in a lifetime, but subsequent transfers will be subjected to the tax. If owners sell off their property valued at RM200,000 or lower, they are also exempted from RPGT. Additionally, the property can be exempted from the tax if it is transferred as a gift within the family, including from husband to wife or vice versa, parent to children or grandparents to grandchildren. But this does not include transfers between siblings.

Expenses allowed for RPGT in 2022

Any costs incurred during the property sell-off can be deducted from the potential chargeable gain before calculating RPGT:

• Fees cover legal, accounting, administrative and more.
• Cost of advertising the selling of property.
• Costs covering renovation or repair to upgrade or maintain the upkeep of the property.

Calculating RPGT

The table below from the Inland Revenue Board shows the rates of RPGT as of January 2022:

Selling Period	Local Malaysians, PRs Rate (%)	Non-local Malaysians Rate (%)
Within 2 years	30	30
In the 3rd year	30	30
In the 4th	20	30
In the 5th	15	30
In the 6th year and beyond	NIL	10

Malaysian citizens David and Tina bought an apartment in Mont’Kiara in 2017 for RM1,000,000. They decided to move to another location, and in 2019, they sold off their Mont’Kiara apartment for RM2,000,000.

So, this means that David’s chargeable RPGT amounts to RM255,000. While this is a simplified formula to calculate RPGT, the total amount gained after tax will vary depending on the individual’s residence status, market price, tax rates, and other factors. But basically, RGPT taxes on the profit gained once the owner sells off their property.

Sellers can either hire a lawyer to handle the process or do it themselves. Do note that there are penalties for late payment of RPGT, and if payments are made after 60 days, the penalty-imposed amounts to 10% of the payable amount to RPGT.

For in-depth information on RPGT, check out the Inland Revenue Board website here.