Real

Property
Gains Tax
(RPGT)

Introduction
Real property gains tax (RPGT) imposes tax
on the disposal of real properties held for
long term investment.
RPGT is the limited form of capital gains tax
used in Malaysia and is governed by the Real
Property Gains Tax Act 1976.
RPGT is imposed on territorial concept.
Income tax vs RPGT - mutually exclusive
whereby if a transaction is subject to income
tax, RPGT will not apply

Real property
Sec

2 defined real property as any land

situated in Malaysia and any interest,
option or right in or over such land.
Land is further defined to include:
1.
2.
3.
4.
5.

The surface of the earth and all substances forming

that surface.
The earth below the surface and substances there
in.
Buildings on land and anything attached to land or
permanently fastened to any thing attached to land.
Standing timber, trees, crops and other vegetation
growing on land.
Land covered by water.

Real property
The

property must be in Malaysia

territory.
A foreign property will not be subject to
RPGT.

Chargeable Persons (s6)

Every person whether resident or nonresident in Malaysia is chargeable in respect
of any chargeable gain he/she has made on
the disposal of a chargeable asset.
Person includes individual, company,
partnerships, incapacitated persons, nonresidents, Rulers & Ruling Chiefs, Hindu
joint family, executors and trustees (Sch 1,
RPGT)

Acquisition Price

Components of acquisition price:

1.
2.

Consideration paid wholly and exclusively for the

acquisition of real property, and
Incidental cost incurred on the acquisition of real
property.

Incidental cost includes stamp duty, legal fees,

tax agents fees, remuneration paid to land surveyor
or valuer for land valuation purposes and advertising
cost for seeking a seller of required property.
Legal fees on the loan agreement to finance the
acquisition of real property is not an incidental cost.

Interest Cost As Incidental

Cost
W.e.f

1/1/2010, interest expense paid

on loan used to acquire the property
(from a property developer on a work-in
progress basis) IS NOT part of
incidental cost of purchase.
It does not form part of the component
of acquisition price of the real property.

Capital Receipts From Real

Property
The

acquisition price would be reduced

due to the following capital receipts:
1.
2.
3.

Compensation received for any kind of

damages.
Insurance recoveries for loss or
damages.
Deposit forfeited in connection with
aborted disposal of real property.

Illustration 1

A bungalow was acquired for a consideration of RM350,000.

The full sum was paid on 10.2.2009. There was no written
agreement for the purchase of the bungalow. Other costs
incurred are as follows:

Stamp duty on transfer

RM
3,500

Cost of extension to bungalow

50,000

Interest on mortgage loan

62,000

In January 2009, a sum of RM30,600 was received from a developer as

compensation for damages to his bungalow caused by piling work
carried out on the adjacent land. Further, a sum of RM11,200 was also
received from the insurance company for the said damage.
In September 2009, a forfeited deposit of RM10,000 was received
from a potential buyer who eventually called off the deal.

Illustration 1- Answer
The computation of acquisition price for the
bungalow would
be as follows:
RM
Consideration paid

RM
350,000

Stamp duty on transfer

3,500
353, 500

Less: Compensation received

30,600

Insurance recoveries

11,200

Deposit forfeited

10,000
(51,800)

Acquisition price

301,700

Disposal Price
It

is a statutory defined concept which

comprises consideration received for the
disposal of real property.
The consideration received will be reduced by
the following components:
1.
2.
3.

Capital expenditure for the enhancement of

the real property.
Legal fees in establishing preserving or
defending the title of the land.
Incidental cost of disposal of real property (i.e.
brokerage fees, valuation fees, legal fees and
advertisement cost to seek a buyer of the
property)

Illustration 2
Based

on illustration 1, the bungalow was sold for

RM500,000. The consideration was paid to him on
1.6.2013.
He incurred the following expenditure in connection
RM
with the sale:
Valuation fee
6,700
Cost of advertisement
Brokerage fees
Legal fees for defending the title

Calculate the disposal price of the bungalow.

1,300
12,500
4,100

Illustration 2
The disposal price would be as follows:
RM

RM

Consideration received

RM
500,000

Less: Permitted expenses

Cost of ext of
bungalow
Legal fees title
defending

50,000
4,100

54,100

Less: Incidental costs of

disposal
Valuation fees
Brokerage fees
Cost of advertisement

6,700
12,500
1,300

20,500 (74,600)
425,400

Illustration 2
The

acquirer is required to withhold

either the whole amount of cash or 2%
of the total value of consideration,
whichever is lower;
Remit the amount to IRB within 60 days;
If not, penalty of 10% will be imposed.
Refer to Contoh 4 Garis Panduan LHDN

Disposal Price Deemed At

Market Value

Circumstances where disposal price is deemed at

market value:
A bargain not at arm's length or gift
A disposal of real property for a consideration that
cannot be valued
A disposal of real property in connection with loss of
employment or gratuity payment
Transfer of real property for satisfaction of debt
Lump sum disposal of real property and other assets
In circumstances where anti avoidance under section
25(2) applies

If MV is higher

Disposal Date &

Acquisition Date
The

disposal date of a seller would be

the acquisition date to the purchaser.
The disposal date will vary accordingly
with the existence of a written
agreement.

Chargeable Gain
RPGT

is payable on chargeable gain

which is the different between the
disposal price and the acquisition price
of a real property.
The RPGT rate applicable varies
between the holding periods of the real
property.

Rate of RPGT
31/3/2007)

(17/10/97-

PRIOR TO 31 MARCH 2007

Gains

arising from disposal of any interest,

option or other right in or over chargeable
assets would be subjected to RPGT
Chargeable assets properties such as land,
building or shares in a real property company
(RPC)
Rate of tax ranges from nil to 30% based on
the holding period of the chargeable assets
RPGT return is required to be furnished to IRB
within one month of the date of disposal

PRIOR TO 31 MARCH 2007 (Cont.)

For individual, no RPGT is imposed on the gain on
disposal if the holding period is more than 5 years.
The individual is also eligible to claim an exemption
of RM5,000 or 10% of the gain, whichever is greater.
Loss on disposal could be carried forward as a tax
relief against any tax assessed on gain arising from
disposal of chargeable assets in the subsequent YA
until fully utilized.
Tax relief = allowable loss X applicable rate of RPGT
The acquirer (or the lawyer) may retain the whole
amount of money received or 5%, whichever is
lesser and remit to IRB.

1 APRIL 2007 31 DECEMBER 2009

The

Minister exempts all persons from

the provisions of the RPGT Act 1976 in
respect of disposal of chargeable assets.
all disposal of landed properties and
RPC shares are exempted from RPGT
Prior year loss cannot be set-off during
these periods.

Rate of RPGT
DISPOSAL

(w.e.f 1/1/2010)

RATE OF TAX ON DISPOSER

Company

Individual 1 Individual
2

Within 2 years

5%

5%

5%

In the 3rd year

5%

5%

5%

In the 4th year

5%

5%

5%

In the 5th year

5%

5%

5%

Exceeding 5th year

0%

0%

0%

Note: 1- citizen & permanent resident (PR)

2 non citizen & not PR

WITH EFFECT FROM 1 JAN 2010

Furnish RPGT return within 60 days from the date of
disposal.
RPGT rate is fixed at 5% regardless of the holding period
but less than 5 years.
Holding period of more than five years 0% rate.
The exemption enjoyed by individual is increased to
RM10,000 or 10% of the chargeable gain, whichever is
greater.
The tax relief for loss on disposal is replaced by the claim
of allowable loss arising from disposal against chargeable
gains from subsequent disposals. Any unutilized
allowable loss can be carried forward for offset against
future chargeable gain until it is fully utilized.
Losses prior to 2007 is now allowed to be set-off (as part
of tax relief).

WITH EFFECT FROM 1 JAN 2010

(cont.)
Tax relief b/f from disposal made prior to 1 April 2007 is
allowed to be utilized for deduction from tax assessed
from disposals made after 31 December 2009.
The acquirer is required to withhold either the whole
amount of money received or 2% of the total value of
the consideration, whichever is lower and remit the sum
to IRB within 60 days from the date of disposal. If the
acquirer fails to do so, a penalty equal to 10% of that
sum will be imposed.
The interest paid to finance the acquisition of asset will
no longer be regarded as an incidental cost to the
acquisition price of the asset.
Taxpayers will be allowed to file the RPGT returns
electronically.

Rate of RPGT

(w.e.f

1/1/2012)
DISPOSAL

RATE OF TAX ON DISPOSER

Company Individual 1 Individual 2

Within 2 years

10%

10%

10%

In the 3rd year

5%

5%

5%

In the 4th year

5%

5%

5%

In the 5th year

5%

5%

5%

Exceeding 5th year

0%

0%

0%

Rate of RPGT
(w.e.f 1/1/2013 and onwards)
DISPOSAL

RATE OF TAX ON DISPOSER

Company Individual 1 Individual 2

Within 2 years

15%

15%

15%

In the 3rd year

10%

10%

10%

In the 4th year

10%

10%

10%

In the 5th year

10%

10%

10%

0%

0%

0%

Exceeding 5th year

Change s in RPGT rates

Type of Disposal

WEF 1st January

Company

Person other than

company

Company /
Non-citizen or
non-PR

201
2

201
3

201
4

201
2

201
3

201
4

201
2

201
3

201
4

Disposal within year

1

10

15

30

10

15

30

10

15

30

Disposal within year

2

10

15

30

10

15

30

10

15

30

Disposal within year

3

10

30

10

30

10

30

Disposal within year

4

10

20

10

20

10

30

Disposal within year

5

10

15

10

15

10

30

Disposal from year 6

or thereafter

Exemption to individuals
(sch 4 exemption)
Individual

disposing real property would be

given an exemption under Sch 4 i.e 10% of the
chargeable gain or RM10,000 (whichever
is higher) effective from 1/1/2010.
Sch 4 exemption is available to any individual
(Malaysian citizens as well as foreigners) who
dispose of the whole unit of real property.
Part disposals of a real property by an individual
will not be granted Sch 4 exemption.
The exemption does not apply to a partnership
or a company.
The amount exempted is deducted against the
chargeable gain.

Illustration 3

Say chargeable gain is RM123,700 & disposal made within 2

years after the acquisition date by an individual taxpayer in
2013.

RM

Chargeable gain

123,700

Less: Sch 4 Exemption (the higher of

10% or RM10,000)

(12,370)
111,330

Rate of RPGT (within 2 years)

RPGT payable

15%
16,699.5
0

Illustration 4

Say chargeable gain is RM123,700 & disposal made within 2

years after the acquisition date by an individual taxpayer in
2009.

RM

Chargeable gain

123,700

Less: Sch 4 Exemption (the higher of

10% or RM5,000)

(12,370)
111,330

Rate of RPGT (within 2 years)

0%

RPGT payable

Nil

Illustration 5

Say chargeable gain is RM123,700 & disposal made within 2

years after the acquisition date by an individual taxpayer in
2010 (formula is applied).

RM
Chargeable gain

123,700

Less: Sch 4 Exemption (the higher of

10% or RM10,000)

(12,370)
111,330

Rate of RPGT
RPGT payable***

30%
5,567

Illustration 5

Say chargeable gain is RM123,700 & disposal made within 2

years after the acquisition date by an individual taxpayer in
2010 (formula is applied).

RM
Chargeable gain

123,700

Less: Sch 4 Exemption (the higher of

10% or RM10,000)

(12,370)
111,330

Rate of RPGT
RPGT payable***

30%
5,567

Illustration 5 (calculation)

Refer to Garis Panduan LHDN

Chargeable gain
Using formula:
Exempted chargeable gain = (A/B)xC
[(111,330 x 30%) (111,330 x 5%)] = A
(111,330 x 30%) = B
111,330 = C

111,330

92,773

Taxable gain (111.330 92,773)

18,557

RPGT (18,557 x 30%)

5,567

Using Effective rate (111,330 x 5%)

5,567

Allowable loss
Disposal price < Acquisition price
Although there is no RPGT payable, nevertheless
a RPGT tax return is required from both disposer
as in the case of a chargeable gain.
Submission of RPGT tax return need to be made
within one(1) month of the disposal as in the
case of a chargeable gain.
W.e.f 1/1/2010 submission within 60 days (2
months).
Penalty of 10% on the tax payable
This is to ensure the loss relief can be carried
forward to be set off against future RPGT
payable.

Loss Relief
Loss

relief = The allowable loss will be

multiplied by the RPGT rate
This loss relief is given by way of a
deduction against the total RPGT tax
assessed for the YA in which the
disposal occurred.
If there is no such RPGT tax payable for
that year, it will be carried forward to
set off against future RPGT payable.

Other consideration
Considerati
on received

Explanation

Gift

Gift of real property would be treated as a disposal

of real property at market value.
No gain no loss transaction applies to the transfer
of real property as gift among parent and child,
grandparent and grandchild, husband and wife.

Donor

The donor would not be liable to any RPGT since

the disposal is deemed to be a no gain and no loss
transactions.

Beneficiary

Deemed to have acquired the real property at the

AP + any permitted expenses ** incurred by the
donor on the real property.

No gain or no loss transaction only applies in the event the transfer of gift took place within 5
years after the date of acquisition of real property by the donor.
** defined to mean capital expenditure for enhancement of the real property and also legal fees
in establishing, preserving or defending the title of the real property.

Private Residence Exemption

RPGT

exemption on disposal of ONE residential

property (once in a life time)
The following conditions must be fulfilled to
enjoy the private residence exemption:
1.
2.
3.
4.

The individual must be a citizen/ permanent

resident of Malaysia.
The real property must be a residential property
or part of the building used for residence.
The residential building is occupied/ rented/ fit for
occupation.
The disposer had not elected for the exemption
prior to this as the exemption is only available
once in the life time and must be exercised
during the submission of CKHT return.

Transfer between
Companies (Schedule 2 para 17)
The

transfer of property between companies

will be treated as no gain no loss if:
1.
2.
3.
4.
5.

Prior approval of DG is required,

Asset is transferred for greater efficiency,
Consideration is wholly of shares or
substantially for shares >75%,
The transferee company is resident in
Malaysia, or
Asset is transferred in any scheme of
reorganisation, reconstruction or
amalgamation.

Transfer between
Companies (Schedule 2 para 17)
The

exemption may be withdrawn if

within three years:
The purpose of transfer was not as
provided for in the exemption.
The transferee company ceases to be in
the same group.
The transferee company ceases to be
resident in Malaysia.