Real Property Gain Tax in a Nutshell

What is Real Property Gain Tax (RPGT) ?

It was first introduced by the Government of Malaysia in 1976, and is a tax on profit made on properties. It is regulated by the Inland Revenue Board of Malaysia (LHDN) under the Real Property Gains Tax Act 1976.

What does it mean? If you are selling a property and when your selling price is higher than the purchase price, it means there is a profit and you will be taxed on the profit made. 

Therefore, RPGT is a tax imposed on profits earned from selling real estate in Malaysia, covering residential, commercial, and agricultural properties, as well as vacant land. 

But the RPGT has a ‘Quantum’ and is not solely depending on the profit made, but also depends on the duration of how long you have held the property and will be charged based on a percentage based on the holding years.

Here is a chart summarized from the LHDN website based on RPGT rates differs according to disposer categories and holding period of chargeable asset. There are 3 parts of disposer categories; Individual (Malaysian Citizen), Company incorporated in Malaysia and Foreigner/Non Citizen.

(Source: https://www.hasil.gov.my/en/rpgt/real-property-gains-tax-rpgt-rates/)

What if the property is an inheritance ?

If you’ve recently inherited a property and are thinking about selling it, there’s one important thing to keep in mind, the RPGT still applies. The holding period — which affects how much RPGT you’ll pay, doesn’t start from when the original owner bought the property. Instead,it starts from the date you officially inherited it.

Selling it shortly after inheriting could mean being taxed at a higher RPGT rate. By knowing this piece of information, it might help your family plan better if there is a consideration for selling inherited properties.

What are the exemptions?

Yes, there are. Only for Malaysians and Permanent residents owning private residences and the individual is entitled to the exemption once in a lifetime. The amount and once in a lifetime amounts to RM10,000 or 10% of the chargeable gain.

It also specifies that it is only relevant to residential properties such as a house, condominium units, apartments, or flats in Malaysia and includes a service apartment and small office home office (SOHO).

For those that are interested to know more in depth, you may visit the website and get all forms for submissions at the LHDN website. https://www.hasil.gov.my/en/rpgt/procedures-for-submission-of-real-property-gains-tax-form

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