Real Property Gain Tax (RPGT) in Malaysia (Re-imposed with effective from 1st Jan 2010)

The Malaysian Government has re-imposed the Real Property Gain Tax (RPGT) during the recent Budget 2010. The RPGT will be fixed at 5% on the gains from the disposal of real property with effective from 1 January 2010. The RPGT for the first year is 5% and applied the same for second, third, fourth and fifth year.

Real Property Chargeable Gains are gains derived from disposal, sell, convey, assign, transfer, settle or alienate whether by agreement or by force of law which fall under chargeable asset. All chargeable assets must be made during the year of assessment and all particulars must be furnished to the Inland Revenue Board of Malaysia as requested.

Example to Illustrate the Calculation of RPGT Payable

Mr A bought a property on year 2007 at a price of RM 100,000 and sold after or on 1st Jan 2010 at RM 200,000 (this property sold within five years from the date of purchase). He made RM100,000 from the transaction and the gains are subject to 5% RPGT and the calculation will be:

RM 100,000 (Property Gains) – RM 10,000 (Waived Exemption) = RM 90,000 (Taxable Gains)

RM 90,000 (Taxable Gains) x 5% (RPGT Rate) = RM 4,500 (RPGT Chargeable)

Thus, the RPGT chargeable to Mr A will be RM 4,500.

Exemption

There are three circumstances where the property seller is exempted from the RGPT.

- The level of exemption is increased from RM5,000 to RM10,000 or 10% of the chargeable gains, which ever is the higher

- Gifts between parent and child, husband and wife, grandparent and grandchild; and

- Disposal of a residential property once in a lifetime.