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Real property gains tax (RPGT) is a type of tax imposed by the Inland Revenue (LHDN) on capital gains incurred from selling real property whether they are land or buildings and is effective for individuals or companies.
RPGT was introduced as a means for the government to curb property speculation in an effort to avoid/prevent property bubbles from forming. Ultimately, the 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.
Starting from January 1st 2014, all properties disposed within three years or less is subjected to 30% RPGT (previously 15% for two years and below and 10% for three years and below). Properties that are disposed within four years of purchase are subjected to 20% tax and 15% for five years.
1st year
15%
30%
2nd year
15%
30%
3rd year
10%
30%
4th year
10%
20%
5th year
10%
15%
6th year & above
0%
0%
The property tax is levied upon anyone selling their properties; however for individuals selling or disposing their property after the 5th year, no RPGT will be levied.
Companies however, will pay a flat rate of 5% starting on the 6th year and thereafter. While non-Malaysians will be levied with 30% of RPGT up to 5 years from the purchase of the property and flat rate of 5% for the preceeding years.
RPGT is supplemented by allowable loss. This means 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.
Click here to see an example of RPGT calculation.
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