Let’s all admit it, taxes in general can sometimes be ridiculously confusing. The Real Property Gain Tax is no exception but fret not for we’re here to help break it down!
Real Property Gains Tax (RPGT) is a tax levied by the Lembaga Hasil Dalam Negeri on chargeable gains derived from the disposal of real property. The rate of the RPGT varies based on citizenship of the property owner as well as whether you are an individual or an establishment.
As of now, Budget 2014 is the latest update we have on the RPGT:
How do you calculate RPGT?
Although it sounds rather complicated, all you have to do is utilize one simple formula.
But how do you get get your chargeable gain? All you have to do is take the price the property is sold for and deduct it with the amount it was originally bought for. Here’s the formula:
Let’s try out a simple example
Let’s say you’re a Malaysian citizen who managed to sell off your 4 year old property for RM750,000, when you originally bought it for RM600,000.
The chargeable gain would be RM150,000.
Your RPGT would then be RM150,000 multiplied by 20%. Your RPGT would be RM30,000.
For Malaysian Citizens
Real Property Gain Tax Exemptions
You’re in luck as there are certain exemptions allowed for the Real Property Gain Tax, being:
- Everyone can benefit from a once-in-a-lifetime exemption from RPGT when you sell your private residential property. (Please utilize this once in lifetime opportunity wisely)
- Exemption on gains arising from the transference of real property between family members (e.g. husband and wife; parents and children; grandparents and grandchildren).
- 10% of profits OR RM10,000 transactions (whichever is higher) is not taxable.