Klik sini untuk versi BM.
A person looking to invest or buy a property in Malaysia should have a clear understanding of Real Property Gains Tax (RPGT) – knowing what it is, when it applies, and how it's computed.
So, what is RPGT?
Levied by the Inland Revenue Board or Lembaga Hasil Dalam Negeri (LHDN), RPGT is a tax imposed on gains derived from disposal of real property. In simplest terms, it's a tax on your net profit when you sell a property.
RPGT was first introduced in 1976 under the Real Property Gains Tax Act 1976. It was introduced as a means for the government to curb property speculation in an effort to avoid/ prevent property bubbles from forming.
Property speculation: Buying or holding on to a property based on the assumption that the capital value will increase over time.
Ultimately, RPGT is a source of revenue for the government and is used to develop the nation, therefore its fluctuations is dependent on the economical needs of the country.
As a result, the tax can be increased or decreased when necessary. As a real example, the government reduced the RPGT during April 2007 – December 2009 to encourage investment.
Fast forward 10 years later, Malaysian citizens or permanent residents who disposes of his or her property within the first five years of acquiring it is subject to RPGT.
And with the new RPGT rates announced in the Malaysian Budget 2019, Malaysian citizens will now be charged 5% in property taxes after the 5th year as well, where it used to be 0%.
Non-citizens and companies on the other hand, will be charged 10% RPGT when they dispose of their property after more than five years from purchasing it.
It has to be noted that the rates payable depend on the entity on which the RPGT is imposed and the holding period of the property.
Meanwhile, the holding period is based on the date of signing of Sale and Purchase Agreement (SPA) and disposal date.
What if I don't gain anything from the sale of my property?
RPGT is supplemented by allowable loss. This means that a loss is made after the disposal of a property.
Tax relief shall be provided if the disposal price is less than the acquisition price or if the disposal price is equal to the acquisition price.
To know the amount payable for this tax, it is important that you know what's your chargeable gain – which is basically the amount arrived at, after deducting the property’s disposal price from its purchase price.
Bear in mind that an individual may only be taxed on the positive net capital gains, which is the amount you get after deducting the disposal price with the purchase price and miscellaneous charges (such as legal fees, administrative fees, advertisement charges and stamp duty).
The net chargeable gain would then be multiplied to the applicable RPGT rate.
There's a bit of good news here as property owners may benefit from the exemptions offered under RPGT. They are:
|1. A once in a lifetime exemption on gains arising from the disposal of one residential property.|
|2. Exemption on gains from the disposal of property between family members (between parents and children, husband and wife, grandparents and grandchildren).|
|3. Waiver exemption that is equivalent to 10% of chargeable gains or RM10,000 (whichever is higher) per transaction is not taxable.|
How to file to pay RPGT:
- Fill out Disposal of Real Property (CKHT 1A) form. Attached with this form is the Sale and Purchase Agreement (SPA) and other documents supporting the deductions that you plan to make from RPGT.
- Those applying for RPGT exemptions should also fill out Notification under Section 27 RPGTA 1976 (CKHT 3) form.
- Ensure that the buyer fills out the Acquisition of Real Property (CKHT 4) form, which should come with a copy of the Sale and Purchase Agreement.
- Submit the forms and other supporting documents to the nearest IRB (LHDN) branch within 60 days.
The forms are available at any IRB (LHDN) branch. They can also be downloaded from IRB’s (LHDN) website.
Want to learn more on how you can own a home? Our ‘Own Your Home’ programme aims to empower 100,000 Malaysian households to become homeowners by 2020. Take charge of your home ownership aspirations now!