Malaysia Real Property Gains Tax

What Is Malaysia Real Property Gains Tax?

Real Property Gains Tax (RPGT) is an important factor when engaged in the disposal of real property activities in Malaysia. RPGT represents a tax that is imposed on the chargeable gains that result from selling properties. The RPGT tax rate imposed varies depending on various criteria such as the period of ownership over the property that will be disposed of and etc. Here is some basic general information that will come in handy for Malaysians as well as foreign investors on how to calculate the RPGT tax rate when the time comes.

Amendments to RPGT Tax Rate

Effective from 1 January 2022, Malaysia’s government has announced under Budget 2022, no RPGT will be imposed on properties that are disposed of after the 5th year from the date of an agreement signed for the acquisition of the said property. In other words, the RPGT tax rate will be reduced from 5% to 0%. However, this privilege is solely extended to Malaysians and permanent residents only. RPGT rate on foreigners and companies will have their RPGT rates maintained at 10%.

Disposal Price and Acquisition Price

The chargeable gain is derived from the difference between the disposal price and the acquisition price of properties.

The acquisition price of the real property represents the purchase consideration in addition to any incidental cost incurred. Incidental costs incurred include expenses such as professional fees for surveyors, property agents, cost of transfer (such as stamp duty), etc.

In computing the disposal price, there are certain permitted expenses and incidental costs which are deductible from the payment to be received for the disposed assets. These permitted expenses and incidental costs include legal expenses, advertisement fees for the purpose of finding a buyer, etc.

Responsibility to Submit Relevant Documents to Lembaga Hasil Dalam Negeri

There are various forms to be completed and submitted as well additional documents for matters pertaining to RPGT which includes submission of Real Property Gains Tax Form within 60 days from the date of disposal of the asset. The general rule in deciding the date of disposal Is based on the date of the written agreement and when the written agreement is not made available, other criteria will be taken into consideration in deciding the disposal date. Failure to submit Real Property Gains Tax Form within the speculated date will result in penalties imposed by the authorities.

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What Are Allowable Losses?

An allowable losses situation is another fancy way to portray when the disposal of property resulted in a loss instead of profit, the individual or company can knock off the loss against future gains that results from selling other properties. However, there are certain terms and conditions applied.

How is the Malaysia Real Property Gains Tax Calculated

In Malaysia, the RPGT is determined based on the chargeable gains made from the sale of a property. The RPGT rate is determined by the number of years of ownership, with a greater rate imposed for shorter periods of ownership.

The RPGT rate that is applicable effective 1 January 2023 is as per below:

Disposal	Malaysian Citizens or Permanent Residents	Non-Malaysian citizens	Companies
Within first 3 years	30%	30%	30%
Disposal in 4th year	20%	30%	20%
Disposal in 5th year	15%	30%	15%
Disposal in 6th year & beyond	0%	10%	10%

How can we help?

In Malaysia, we offer a variety of tax services, including aid with Real Property Gains Tax (RPGT). Our professionals can walk you through the regulatory procedures, advise you on acceptable losses and exemptions, and assist you in filing your RPGT tax forms accurately and on time. With our advice, you can ensure RPGT compliance and prevent potential risks or penalties.

Finally, Real Property Gains Tax (RPGT) is an important factor to consider when the acquisition or disposal of property or assets in Malaysia. You can manage the regulatory requirements, understand your permitted losses and exemptions, and ensure that your RPGT tax reports are accurate and timely with the assistance of our team of professionals. Contact us today to learn more about how our tax services in Malaysia might help you.

FAQs

Q1: Is it legal for a foreign corporation to acquire property in Malaysia?

A: A foreign firm can own property in Malaysia, but it must adhere to foreign ownership limitations and get the relevant approvals.

Q2: How is taxable income for RPGT determined in Malaysia?

A: In Malaysia, taxable income for RPGT is determined using the difference between the disposal and purchase prices and is subject to RPGT rates based on the number of years of ownership.

Q3: When is the Real Property Gains Tax in Malaysia due?

A: Real Property Gains Tax is normally owed within 60 days of the property or asset being sold, or before the sale if the seller is a non-resident. Late payment may result in interest and penalties.

Q4: What happened when I submitted my Real Property Gain Tax form exceeded the prescribed date?

A: An appeal can be submitted to LHDN. However, the appeal is subject to the approval of the authority.

Q5: How can I reduce the amount of RPGT due in Malaysia?

A: Allowable losses incurred as a result of the sale of a property or asset can be utilized to lower the amount of RPGT owed in Malaysia. These losses might be caused by a drop in the value of the property or asset, expenses for upgrades, or other circumstances.