The Real Properties Gains Tax or RPGT is basically a tax levied on the profit gained when you sell property or land. The rates of how RPGT is collected depends on whether you are a citizen or a foreigner and whether you’re an individual or a developer selling off the property. The RPGT is collected by the Inland Revenue Board or Lembaga Hasil Dalam Negeri (LHDN).

A couple of years ago, the government increase the RPGT for everyone across the board in order to control property speculators (or popularly known as ‘flippers’) which were driving property values up and above the affordability of many middle class Malaysians.

The increased RPGT rate is supposed to discourage both developers and individual property investors who make a living buying and selling units from overly increasing the prices of their lots, also called ‘flipping’.

How is the RPGT calculated?　
It’s actually very easy to understand. First of all, it’s important to understand the terms. The first step is to calculate your Gross Chargeable gain, and then determine your Net Chargeable gain and from there calculate the percentage of RPGT:

Acquisition Price – Selling Price = Gross Chargeable gains

Gross Chargeable gains – Individual Exemption waiver (10% or RM10,000) – Legal Fees – Real estate fees – administrative fees – expenditure to maintain/upgrade property = Net Chargeable gains

RPGT rate (%, depending on whether company or individual, and how many years the property has been owned) x Net Chargeable gains = Tax payable

What are the RPGT rates?　
As of Budget 2014, the taxation rate for citizens or permanent resident, companies and non-residents are 30% if the property has been owned for 3 years and below. This rate is decreased to 20% and 15% in the fourth of fifth year of ownership respectively for residents and companies. Non-residents or foreigners still have to pay 30% in the fourth and fifth year of ownership.

After five years of ownership, citizens don’t have to pay RPGT when they sell their property but companies and non-citizens still have to be taxed 5%.

Exemptions　
Gross Chargeable gains for individuals (not companies) will be given a waiver of RM10,000 or 10%, whichever one is greater.
A citizen or permanent resident is entitled to RPGT once in their lifetime of they are selling their residential property, no matter how long they have owned it.

Transactions that incur no profits, like transfer of properties between family members, spouses, or donation of the property to charity or the state is exempted of RPGT altogether.

How do I pay RPGT?　
RPGT is usually paid within 60 days of a taxable transaction and is handled by your lawyer so that any misunderstandings and mistakes with the paperwork can be avoided.


(中文版请看这里:http://www.durianproperty.com.my/blog/article/1183)