what is RPGT ?

Real Property Gains Tax (RPGT) is a form of Capital Gains Tax that is imposed on the disposal of property in Malaysia. It was suspended temporarily in April 2007 to December 2009, and reintroduced in 2010. In 2014, the RPGT was increased for the fifth straight year since 2009. So how is it calculated, and what kind of impact does it have on you?

Based on the Real Property Gains Tax Act 1976, RPGT is a tax on chargeable gains derived from disposal of property. A chargeable gain is the profit when the disposal price is more than purchase price of the property. What most people don’t know is that RPGT is also applicable in the procurement and disposal of shares in companies where 75% of their tangible assets are in properties, a.k.a. Real Property Companies (RPC). RPGT applies to both residents and non-residents.
You will be only be taxed on the positive net capital gains which is disposal price less the purchased price less the miscellaneous charges such as: stamp duty, legal fees, advertisement charges, etc. Additionally, a waiver on the taxable amount is granted to individuals (but not companies). The holding period is from the date on the S&P agreement till the disposal date. For a quick calculation, the formula is:
Chargeable Gain = Disposal Price - Purchased Price
Net Chargeable Gain = Chargeable Gain - Exemption Waiver (RM10,000 or 10% of Chargeable Gain, whichever is higher)
Tax payable = RPGT Rate (based on holding period) * Net Chargeable Gain
If you'd like for a simpler way to compute your RPGT, why not check out this handy calculator which will save you the hassle!

 

RPGT Exemptions

Good news! There are some exemptions allowed for RPGT. Among the exemptions are:
  1. Exemption on gains from the disposal of one residential property once in a lifetime to individual (please utilise this once in lifetime opportunity wisely).
  2. Exemption on gains arising from the disposal of real property between family members (e.g. husband and wife; parents and children; grandparents and grandchildren).
  3. 10% of profits OR RM10,000 per transaction (whichever is higher) is not taxable.

Comments

  1. AnonymousOctober 22, 2018 at 5:03 AM

    (RPGT) OR Real Property Gains Tax is a ‘capital gains’ tax that the Malaysian government levies when a property is disposed of (sold). It was first introduced in 1975 under the Real Property Gains Tax Act 1976. It’s basically a tax charged on the capital gain (or net profit) a seller makes when he or she sells a property. The tax is payable by the seller of the property, and it’s payable to Malaysia's Inland Revenue Board, or Lembaga Hasil Dalam Negeri in Malaysia (LHDN)

    Formula:
    RPGT = Chargeable Gain x RPGT Rate

    ReplyDelete

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