INTRODUCTION (RPGT)

REAL PROPERTY
GAINS TAX (RPGT)
RPGT was imposed on
gains arising from the disposal of real
properties
REAL PROPERTY GAINS TAX ACT situated in Malaysia.
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RPGT CHARGEABLE GAIN

Chargeable gain:
Real property is defined in s 2 of RPGT Act – mean any land
situated in Malaysia … Disposal price less acquisition price.

Chargeable Person:
Under Sec. 6, RPGT Act, every person whether R or not
Disposal price more than Purchase Price = Chargeable gain
resident in Malaysia for YA is chargeable in respect of
any chargeable gain on disposal of chargeable asset.
RPGT only be imposed where there exists chargeable gain
Person – a company, partnership, body of person and upon disposal of RP.
corporation sole.

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ALLOWABLE LOSS
DISPOSAL PRICE (PARA 5, SCH 2)

Allowable loss would be arise when the disposal price is less Consideration received for the disposal of RP.
than acquisition price.
LESS:PERMITTED EXPENSES (PE)

Allowable loss from the disposal of real property would be - Capital expenditure for the enhancement of RP – renovation cost

allowed to be c/f - Legal fees in establishing, preserving or defending the title of land.

to be set-off against the subsequent chargeable gain from

LESS: INCIDENTAL COST
subsequent disposal
Incidental cost of disposal of RP – include brokerage fees, valuation
either in the same YA or following YA. fees, legal fees and advertisement cost seek a buyer of RP.

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 DISPOSAL PRICE – E.G. ACQUISITION PRICE (PARA 4, SCH 2)
Acquisition price of real property (RP) comprises of:
E.g.: Waltz Sdn Bhd disposed of an asset in 2018 for a consideration of
RM750,000. The disposal price is arrived at as follows: Consideration paid wholly and exclusively for the acquisition of
RP.
 RM AND
Consideration received 750,000 Incidental cost incurred on the acquisition of RP – includes stamp
duty, legal fees, tax agents fees, remuneration paid to land surveyor
Deduct RM or valuer for land valuation purposes…
-Renovations (PE) 75,000 LESS
• Compensation received for any kind of damages to RP.
-Legal expenses for protection
• Insurance recoveries for loss/ damages to RP
 of title or asset (PE) 15,000
• Deposit forfeited in connection with aborted disposal of RP
-Incidental expenses 5,000 (95,000)
Disposal price 655,000

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NON INCIDENTAL COST ACQUISITION PRICE – E.G.

Interest expenses paid on loan used to acquire the real RM RM

property is NOT incidental cost. It does not form part of the
acquisition price. Consideration paid for real property (RP) 450,000
ADD
Legal fees on loan agreement to finance the acquisition of RP –
Incidental expenses (legal fee, stamp duty) 15,000
not incidental cost.
LESS:
• Compensation received due to damages to RP. (3,000)
• Insurance recoveries for loss/ damages to RP (2,200)
• Deposit from buyer: amount forfeited (10,300)
•

ACQUISITION price 449,500

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DISPOSAL DATE AND

MARKET VALUE ACQUISITION DATE

The disposal date of a seller would be the acquisition date

Market value of the chargeable asset on the date of disposal has to be
applied where the disposer and the acquirer are connected persons such as
to the purchaser.
–

•Individuals who are relatives or an individual and the relatives of his spouse; With written agreement –
•Two companies under the same group of companies, one has control over disposal of RP shall be deemed to have taken place on the
the other or both companies are under a common control by a third company
date of such agreement regardless that the money
(holding company);
consideration has not been received.
•An individual and a company controlled by him.

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 Real Property Gains Tax rate:
DISPOSAL DATE AND Date of disposal Companies Individuals Individuals
ACQUISITION DATE (citizen/
permanent
(non-citizen)

resident)
Without written agreement:
Disposal within 3 years after the 30% 30% 30%
The disposal date shall be the date of completion of the acquisition date
disposal of the asset – whichever is earlier of
Disposal in the 4th year after the 20% 20% 30%
acquisition date

The date on which the ownership of the disposed asset is Disposal in the 5th year after the 15% 15% 30%
transferred by the disposer acquisition date

Disposal in the 6th year after the 10% 5% 10%

acquisition date or thereafter
The date on which the disposer has received the whole
amount (100% consideration) or value of the consideration
for the transfer.

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EXEMPTION TO INDIVIDUAL SCH 4 EXEMPTION TO INDIVIDUAL

PART DISPOSAL

PRIVATE RESIDENCE EXEMPTION: An individual who

is a citizen or a permanent resident will be given a once-in-lifetime exemption
on any chargeable gain arising from the disposal of his private residence if he
elects in writing for exemption to apply to that private residence. (SEE NEXT ⚫A is part of the area of the chargeable asset disposed;
SLIDE) ⚫B is the total area of the chargeable asset;

SCHEDULE 4 EXEMPTION: ⚫ Exemption for part disposal of land

An amount of RM10,000 or 10% of the chargeable gains, whichever higher – ⚫ (A/B* RM10,000) Or 10% of Chargeable gain
granted as an exemption to an individual (do not need to be Malaysian/PR)
upon disposal of real property. ⚫ Whichever is higher
For an individual case, the Schedule 4 exemption would be given before the
deduction of allowable loss.

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EXEMPTION TO INDIVIDUAL NO GAIN NO LOSS SITUATIONS

Transactions in which disposal price is deemed equal to
acquisition price under Para 3 of Sch 2:
PRIVATE RESIDENCE EXEMPTION  Devolution of a deceased person’s assets to his trustee or legatee.

To qualify for once-in-lifetime exemption the following  Transfer between spouses.

 Transfer between an individual or his wife and the company controlled by the individual
conditions must be fulfilled:
or his wife, for a consideration consisting substantially (more than 75%) of shares in that
The individual must be a citizen or permanent resident of company.
Malaysia.  Transfer between an individual and a nominee who has no vested interest in the assets.

The property must be residential property or part of the  Transfer by way of securities.

building used for residence.  Gifts to Government, local authority or charity.

 Disposal due to compulsory acquisition.
The property is owned by the individual or spouse of
individual.  Disposal of Islamic bank under Syariah principles.

The individual had not applied for the exemption before.

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 NO GAIN NO LOSS SITUATIONS NO GAIN NO LOSS SITUATIONS
(PARA 12 OF SCHEDULE 2 RPGT). (PARA 12 OF SCHEDULE 2 RPGT).

 Where there is a gift of RP to another person, it is  Where a gift is made and the donor (who is a
considered disposed at market value. citizen/permanent resident in Malaysia) and the beneficiary
and
 Relationship of the donor and the beneficiary:
 The recipient is deemed to acquire it at market value husband and wife,
parent and child,
grandparent and grandchild

DONOR is deemed to have received no gain and suffered

no loss – exempted from RPGT
FOR RECIPIENT: (See next slide)
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NO GAIN NO LOSS SITUATIONS NO GAIN NO LOSS SITUATIONS

(PARA 12 OF SCHEDULE 2 RPGT). (PARA 12 OF SCHEDULE 2 RPGT).

 RECIPIENT (beneficiary) of the gift of real property would

be deemed to  Where a gift is made and the donor (who is NOT a citizen
:have acquired the real property: in Malaysia) and the beneficiary (husband and wife, parent
and child, grandparent and grandchild),
DONOR’s acquisition price and DONOR’s permitted
expenses. DONOR is deemed to have disposed it at market value.

FOR RECIPIENT: (See next slide)

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TAXPAYER’S RESPONSIBILITY TAXPAYER’S RESPONSIBILITY

The RPGT return shall within 60 days of the date of When the disposal is not subject to tax or exempted from
disposal of the real property be submitted to the IRB by the RPGT, the disposer is required to submit the RPGT return
disposer and acquirer.The RPGT return can be filed and a notification form within 60 days from the date of
electronically. disposal.
Under S21B, the acquirer is responsible to withhold the
whole amount of money received or 3%* of the value of Acquirer will then not withhold any tax 3%/7%.
consideration (whichever lower) and shall within 60 days after
the date of such disposal pay over to the IRB.
* 7% if the disposer is not a citizen or not a PR

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 IRB’S RESPONSIBILITY TAXPAYER’S RESPONSIBILITY
Non-compliance to this will result a late payment penalty of 10% being
IRB will issue a notice of assessment to the disposer. imposed as follows:

RM
The RPGT after deducted the amount remitted by the Total consideration (sale proceeds) A
acquirer shall be payable within 30 days of the notice of
Retention amount 3%/7% X A B
assessment.* Or Add: Late payment penalty 10% X B C
Debt due to the Government (B/C) X

Any excess of the above will be refunded to the disposer

*A 10% penalty will be imposed every 30 days thereafter for late
payment.

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PENALTY ON NON SUBMISSION

OF TAX RETURN
300% penalty on RPGT payable or

Be charged upon conviction and be liable for

1. a fine or not more than RM5,000 or
2. Imprisonment of not more than 12 months or
both
 IRB empowered to further impose additional penalty on
RPGT payable

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