REAL PROPERTY

GAINS TAX (RPGT)

REAL PROPERTY GAINS TAX ACT

1976

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INTRODUCTION (RPGT)

RPGT was imposed on

gains arising from the disposal of real
properties
situated in Malaysia.

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 RPGT

Real property is defined in s 2 of RPGT Act – mean any land

situated in Malaysia …

Chargeable Person:
Under Sec. 6, RPGT Act, every person whether R or not
resident in Malaysia for YA is chargeable in respect of
any chargeable gain on disposal of chargeable asset.

Person – a company, partnership, body of person and

corporation sole.

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REAL PROPERTY

Land situated in malaysia &

any interest, option or other

right in or over such land

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 LAND

Surface of the earth

Earth below the surface
Buildings on land & anything
attached to land
Timber, trees, crops & vegetation on
land
Land covered by water

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CHARGEABLE GAIN

Chargeable gain:
Disposal price less acquisition price.

Disposal price more than Purchase Price = Chargeable gain

RPGT only be imposed where there exists chargeable gain

upon disposal of RP.

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 ALLOWABLE LOSS

Allowable loss would be arise when the disposal price is less

than acquisition price.

Allowable loss from the disposal of real property would be

allowed to be c/f
to be set-off against the subsequent chargeable gain from
subsequent disposal
either in the same YA or following YA.

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DISPOSAL PRICE (PARA 5, SCH 2)

Consideration received for the disposal of RP.

LESS:PERMITTED EXPENSES (PE)

- Capital expenditure for the enhancement of RP – renovation cost
- Legal fees in establishing, preserving or defending the title of land.

LESS: INCIDENTAL COST

Incidental cost of disposal of RP – include brokerage fees, valuation
fees, legal fees and advertisement cost seek a buyer of RP.

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 DISPOSAL PRICE – E.G.

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:
RM
Consideration received 750,000
Deduct RM
-Renovations (PE) 75,000
-Legal expenses for protection
of title or asset (PE) 15,000
-Incidental expenses 5,000 (95,000)
Disposal price 655,000

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ACQUISITION PRICE (PARA 4, SCH 2)

Acquisition price of real property (RP) comprises of:

Consideration paid wholly and exclusively for the acquisition of

RP.
AND
Incidental cost incurred on the acquisition of RP – includes stamp
duty, legal fees, tax agents fees, remuneration paid to land surveyor
or valuer for land valuation purposes…
LESS
• Compensation received for any kind of damages to RP.
• Insurance recoveries for loss/ damages to RP
• Deposit forfeited in connection with aborted disposal of RP

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 NON INCIDENTAL COST

Interest expenses paid on loan used to

acquire the real property is NOT incidental
cost. It does not form part of the acquisition
price.

Legal fees on loan agreement to finance the

acquisition of RP – not incidental cost.

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ACQUISITION PRICE – E.G.

RM RM
Consideration paid for real property (RP) 450,000
ADD
Incidental expenses (legal fee, stamp duty) 15,000
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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 MARKET VALUE

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
–

•Individuals who are relatives or an individual and the relatives of his spouse;

•Two companies under the same group of companies, one has control over
the other or both companies are under a common control by a third company
(holding company);

•An individual and a company controlled by him.

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DISPOSAL DATE AND

ACQUISITION DATE

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

to the purchaser.

With written agreement –

disposal of RP shall be deemed to have taken place on the
date of such agreement regardless that the money
consideration has not been received.

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 DISPOSAL DATE AND
ACQUISITION DATE

Without written agreement:

The disposal date shall be the date of completion of the
disposal of the asset – whichever is earlier of

1) The date on which the ownership of the disposed asset is

transferred by the disposer

2) 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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Real Property Gains Tax rate:

Date of disposal Companies Individuals Individuals

(citizen/ (non-citizen/
permanent Non-permanent
resident) resident)

Disposal within 3 years after the 30% 30% 30%

acquisition date

Disposal in the 4th year after the 20% 20% 30%

acquisition date

Disposal in the 5th year after the 15% 15% 30%

acquisition date

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

acquisition date or thereafter

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 EXEMPTION TO INDIVIDUAL

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 SLIDE)

SCHEDULE 4 EXEMPTION:
An amount of RM10,000 or 10% of the chargeable gains,
whichever higher – granted as an exemption to an individual (do
not need to be Malaysian/PR) upon disposal of real property.

For an individual case, the Schedule 4 exemption would be given

before the deduction of allowable loss.

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PRIVATE RESIDENCE EXEMPTION TO

INDIVIDUAL
PRIVATE RESIDENCE EXEMPTION
To qualify for once-in-lifetime exemption the following conditions
must be fulfilled:
1. The individual must be a citizen or permanent resident of Malaysia.
2. The property must be residential property or part of the building
used for residence.
3. The property is owned by the individual or spouse of individual.
4. The individual had not applied for the exemption before.

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 SCH 4 EXEMPTION TO INDIVIDUAL
PART DISPOSAL
 A is part of the area of the chargeable
asset disposed;
 B is the total area of the chargeable

asset;

Exemption for part disposal of land

(1)A/B* RM10,000)
Or (2)10% of Chargeable gain

Whichever is higher

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NO GAIN NO LOSS SITUATIONS

Transactions in which disposal price is deemed equal to
acquisition price under Para 3 of Sch 2:
1. Devolution of a deceased person’s assets to his trustee or legatee.
2. Transfer between spouses.
3. Transfer between an individual or his wife and the company controlled by the individual
or his wife, for a consideration consisting substantially (more than 75%) of shares in
that company.
4. Transfer between an individual and a nominee who has no vested interest in the assets.
5. Transfer by way of securities.
6. Gifts to Government, local authority or charity.
7. Disposal due to compulsory acquisition.
8. Disposal of Islamic bank under Syariah principles.

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

 Where there is a gift of RP to another person, it is

considered disposed at market value.

 The recipient is deemed to acquire it at market

value

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NO GAIN NO LOSS SITUATIONS

(PARA 12 OF SCHEDULE 2 RPGT).

 Where a gift is made and the donor (who is a citizen/permanent

resident in Malaysia) and the beneficiary and
 Relationship of the donor and the beneficiary:
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
(PARA 12 OF SCHEDULE 2 RPGT).

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

be deemed to
:have acquired the real property:

DONOR’s acquisition price and DONOR’s permitted

expenses.

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NO GAIN NO LOSS SITUATIONS

(PARA 12 OF SCHEDULE 2 RPGT).

 Where a gift is made and the donor (who is NOT

a citizen in Malaysia) and the beneficiary (husband
and wife, parent and child, grandparent and
grandchild),

DONOR is deemed to have disposed it at market

value.

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 TAXPAYER’S RESPONSIBILITY

The RPGT return shall within 60 days of the date of

disposal of the real property be submitted to the IRB by the
disposer and acquirer. The RPGT return can be filed
electronically.
Under S21B, the acquirer is responsible to withhold the
whole amount of money received or 3%* of the value of
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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TAXPAYER’S RESPONSIBILITY

When the disposal is not subject to tax or exempted

from RPGT, the disposer is required to submit the
RPGT return and a notification form within 60
days from the date of disposal.

Acquirer will then not withhold any tax 3%/7%.

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 IRB’S RESPONSIBILITY

IRB will issue a notice of assessment to the disposer.

The RPGT after deducted the amount remitted by the acquirer

shall be payable within 30 days of the notice of assessment.* Or

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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TAXPAYER’S RESPONSIBILITY
Non-compliance to this will result a late payment penalty of 10% being
imposed as follows:

RM
Total consideration (sale proceeds) A

Retention amount 3%/7% X A B

Add: Late payment penalty 10% X B C
Debt due to the Government (B+C) X

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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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