Real Property Gains

Tax
[Cukai Keuntungan Harta Tanah]

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RPGT Terms

2
What Trigger RPGT

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Meaning of ‘Disposal” &
“Acquire”

4
How to Determine Taxable Value
[Chargeable Gain (CG)]

Q: Abu bought (acquired) two houses for RM300,000

each. He disposed both the houses for RM280,000 and
RM350,000 in 2014.

What is the chargeable gain / allowable loss?

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Disposal Price

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General Rule : Disposal Price
Para 5 Schedule 2

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 2. Permitted Expenses:
Para 5(1) Schedule 2

Eg.
•Renovation
•Extension of building
•Legal expenses in defending title
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3. Incidental Costs of Disposal

Expenses (related to disposal):

Professional fees e.g. real estate agent, tax
advice
Cost of transfer eg Legal fees & stamp duty
Cost of advertising to find buyer
Cost of valuation assessment

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Rule 2: DP “deemed” MV

(Para 9
Sch 2)

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Q: What is the DP?
Q1.Abu sells his house for RM 300,000. The legal costs is RM 2,000. The
commission paid to agent to find buyer RM 1,200. The cost of
advertisement to find buyer RM 800.
Q2. En Ramli disposed a house for RM500,000. He incurred RM100,000 on
renovations. The legal fees and stamp duty on the disposal is RM20,000.
Q3: Jim gift a piece of land to Sally. The MV at the date of transfer is
RM350,000.

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 ◦ RM

1. Consideration 300,000
Less: Incidental cost
Commission 1,200
Legal fees 2,000
Advertisement 800 (4,000)
Disposal price 296,000

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◦ RM
Consideration 500,000
Less: Permitted expenses – renovation (100,000)
Less: Incidental cost – Stamp duty and legal fees
(20,000)
Disposal price 380,000

3. Disposal price = RM350,000 – gift therefore consideration cannot be ascertained – market

value is taken.

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Acquisition Price

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General Rule 1 : Acquisition Price
Para 4 Schedule 2

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 Incidental Costs on Acquisition:

Expenses (related to acquisition):

Professional fees eg real estate agent (commission)
Cost of transfer eg Legal fees,stamp duty

Advertising costs to find seller, valuation fees

GST paid by acquirer if acquirer is
Not liable / liable but not claimable /entitled for ITC
exclude those liable but fail to register/ registered or liable
EXCLUDED :
Expenses deductible or would be deductible under ITA

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 Recoveries:
Para 4 Schedule 2

-Compensation or receipts for damages ….

-Insurance receipts for damages or injuries
-Deposits forfeited in respect of an aborted sale

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 What is the AP?
.
 For property acquired before 1 January 2000, was amended to
2013 . Therefore the standing law as at 2019 is that for any
property acquired before 1 January 2013, the market price of the
property as at 1 January 2013 will be deemed to the acquisition
price.
The relevant legislation is Schedule 2 & 3 of the Real Property
Gain Tax Act 1976
Effective date is for disposal of property from 12 October 2019

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 What is the AP?
Consideration RM 100,000.
Legal fees for acquisition RM 2,000
Commission paid to agent to find seller RM 1,200
Cost of advertisement to find seller RM 800
Compensation received for damages RM 3,000
Insurance money received for damages RM 2,000
Deposit forfeited RM 1,000.
AP = Consideration + IC – Recoveries
Asset acquired on 31.12.2007.

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Consideration RM 100,000
Add: Incidental cost
Legal fees 2,000
Agent’s commission 1,200
Advertisement 800 4,000
◦ 104,000
◦ Less:
◦ Recoveries
◦ Damages 3,000
◦ Insurance 2,000
◦ Deposit forefeited 1,000 (6,000)
◦ Acquisition price 98,000

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 Q: Chargeable Gain?
1. Chia acquired a house SS 2 for RM 100,000
and incurred renovation RM 50,000.
The house was sold for RM 200,000. The cost of
advertisement to find buyer was RM 200.

2. Ali bought a house on 2.2.12 for RM500,000

and incurred RM100,000 on renovations.
On 3.3.14, Ali sold it for RM800,000. He
incurred RM20,000 in commission on the sale
and RM10,000 in stamp duty on the
acquisition.

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Chargeable Gain

Disposal price - consideration

200,000
Less: Advertisement cost 200inc.cost
Cost of renovation 50,000 - enhance
50,200
149,800
Less: Acquisition price 100,000
Chargeable gain 49,800
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 ◦ RM RM

Consideration 800,000
Less: Incidental cost
◦ Commission ( 20,000)
◦ Permitted expenses
◦ Enhancement cost – renovation (100,000)
◦ Disposal Price 680,000
Acquisition price
Consideration 500,000
Add.Incidental cost – stamp duty 10,000
Acquisition price 510,000
Gain 170,000

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Rates of Tax

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 RPGT Rate : From YA2019
1.Co 2.Ind 3.Ind

Disposed within 3 yrs 30% 30% 30%

Disposal in 4rd year 20% 20% 30%
Disposal in 5th year 15% 15% 30%
Disposal in 6th year 10% 5% 10%
and thereafter
1. Company, Trustee of trust, Association
2. Individual who is a citizen and permanent resident. For property below RM200,000 exemption given in 6th.year
3.Individual who is not a citizen and not permanent resident or company not incorporated in Malaysia

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 Q: Rates of Tax
Date Date Holding Pd Category RPGT
Acquired Disposed (within ? rate
Years)

17.8.12 14.6.14 2 Co 30%

17.8.09 14.6.2014 5 R Ind 15%

17.9.10 14.4.2014 4 NR Ind 30%

1.6.2006 15.1.2014 8 Co 10%

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 RPGT Computation
- For companies (using RPGT rate)
Disposal price XXX

Less: Acquisition price XXX

Chargeable gain (CG) XXX

RPGT Payable (CG@RPGT rate) XXX

Comments
The computation for individual will include Para 2 Sch 4 exemption.
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 Example of RPGT Computation
(Company)

Disposal Price: (in Jan 2013)

Consideration received RM 6,000,000
Less: Permitted expenses
(Plantation expenditure) RM 2,500,000
Incidental costs: commission 120,000
legal fees 10,000 2,630,000
--------------------------------------------------
3,370,000
Acquisition Price: (in Jun 2009)
Consideration paid RM 300,000
Incidental costs: Professional fees 6,000
Stamp duty 5,000
-----------------
311,000
Less: Recoveries (compensation) 100,000 211,000
--------------------------------------------------
Chargeable Gain RM 3,159,000
---------------------
RPGT Payable = CG @ RPGT rate
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Exemption for Individual
Para 2 Sch 4

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 Exemption for Individual
Para 2 Sch 4

If the chargeable asset which is partly disposed the

amount of exemption is determined by;

AxC A= area of chargeable assets disposed

B B= total area of chargeable assets
C= RM10000
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 Date of Disposal
Para 15(1) Schedule 2

1. Date of agreement or
2. In the absence of an agreement, the date of
completion of the disposal I.e. date when
(a) ownership is transferred or
(b) consideration is received by the
disposer, whichever is the earlier

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 Date of Acquisition
Para 15(2) Schedule 2

1. AD = DD of the disposer
2. In the absence of an agreement, the date of
completion of the disposal I.e. date when
(a) ownership is transferred or
(b) consideration is received by the
disposer, whichever is the earlier

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DD for conditional agreement
Para 16 Schedule 2
Where the contract is conditional, the DD is
the date the last condition is fulfilled or
date approved by the Gov’t.
Where the condition relates to the exercise
of right under an option, the DD is
regarded as taking place at the time the
contract was made
.
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Allowable Loss (AL) (From 1.1.2010)

1. AL is deductible agst total CG in YA

2. Excess of the AL can be carried forward

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Disallowed Losses Disregarded
Para 33 Sch 2

Date of disposal before enforcement of Act.

Gain would have been exempted.
Disposal of shares in a RPC.
There was a disposal not included in return.

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RPGT Compliance

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Responsibility of Disposer

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Responsibility of Acquirer

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 RPGT Compliance
Penalty
◦ Late filing under Section 29(3)
…not exceeding RM 5000 or
12 months imprisonment or
both
Additional penalty if additional tax payable [s29(5)]
◦ Late payment of tax (RPGT must be paid within 30 days from
notice of assessment)
… Section 21(4)…10%

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RPGT Compliance
In the event of appeal the taxpayer needs to settle the tax liability while
waiting for the outcome of the appeal – S21C
S22(1) DG in the opinion that person likely to leave Malaysia without
settling the RPGT debt can issue certificate containing details of tax
liability to Commissioner of Police or Immigration to prevent person
from leaving the country.
From 2021 onwards Commissioner of Police or Immigration can issue
the certificate on their own under S22(1A)
Where a company owes tax liability for RPGT, the directors of the
company can be jointly liable for the tax liability and under S23 the tax
liability can be recovered from the directors.

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RPGT EXEMPTION

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RPGT Exemption

Para 3(b) Sch 2

Transfer between spouses(citizens)
1

H/W transfer to Controlled Co in Para 3(b) Sch 2

consideration of at least 75% of
2
shares(citizen)

Gifts Para 12 Sch 2

3

Transfer bet Co’s in same group Para 17 Sch 2

4

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Transfer bet Spouses
Para 3(b) Schedule 2

Real Property
•Husband •Wife

No Gain or AP(W) = AP(H) + PE

Loss
( Cost to the old owner)
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1. Gift: Donor; No Gain or Loss
[Gift btw spouses, parent and child or grandparent and grandchild]
(para 12 apply)

Real Property
•Parent •Child
•Husband •Wife
•Grandparent •Grandchild

No Gain Or AP (Recipient) = Donor AP

Loss + Donor permitted expenses.
(for Donor) (cost to the donor)
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 2. Gift: Donor liable for RPGT.
(Para 12 does not apply)

Real Property
• Donor • Recipient

ACQ price = MV at date of

DP= MV
transfer

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Transfer RP to Controlled Company: Para 3(b)

Real Property
•Individual •Family
Controlled
>=75% shares + Cash Company

No Gain Or ACQ price of shares = ACQ Price of

Loss RP + PE – cash received.
[AD = date of transfer of RP to the Co]
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Eg:
1. Mr Gill transferred his house to his wife on 5.6.2014.
2. He acquired it on 15.6.2010 for RM 360,000, incurred renovation cost of RM
70,000 and legal fees of RM 6,000 to defend the title. In addition he incurred
stamp duty of RM 5,000 in relation to the purchase.
2. His wife sold it on 12.12.14 for RM 390,000.
What is the AP of the wife?
AP(wife)=AP(husband) + PE
= [consideration + IC - recoveries] + PE
= [360,000 + 5,000 - 0] + [70,000 +6000]
= 441,000

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 Mr Tong acquired a shophouse on 1.1.2006 for RM 500,000 and
Eg: gift to his daughter on 1.8.2010. The market value at 1.8.2010
was RM 600,000. The daughter sold the property for RM
750,000 0n 1.9.2014

Disposal price 750,000

Less: Acquisition price 500,000

Chargeable gain 250,000

Less:RM 10,000 or 10% of CI whichever is higher 25,000
Net CG 225,000

RPGT payable @15% 33,750

 Para3(b)
• Mr Tong acquired a shophouse on 1.1.2000 for RM 500,000 and
transferred to his Tong Sdn Bhd ,a company controlled by Mr
Tong on 1.8.2010 in consideration of 600,000 shares. The market
value at 1.8.2010 was RM 600,000. Mr Tong sold all his 600,000
shares for RM 750,000 0n 1.9.2014.

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 Para 3(b) shares

Disposal price 750,000

Less: Acquisition price 500,000

Chargeable gain 250,000

Less:RM 10,000 or 10% of CI whichever is higher 25,000
Net CG 225,000

RPGT payable @15% 33,750

Transfer Between Group Companies
(Para 17(1)(a))
Real Property
•Company •Company In
Same Group
>=75% shares + Cash

No Gain Or AP = Transferor AP + Transferor PE.

Loss
ACQ Date = Written Agreement’s Date

Note:17(1)(a) Disposal
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 Inter-Company Transfer
Para 17(1)(a) Schedule 2 to RPGT Act

A transfer between same group of companies;

Conditions:
1.Obtain approval from DG prior to transfer
2.Asset in M’sia and transferee co is resident in Malaysia
3.Transfer to bring about greater efficiency
4.The consideration is at least 75% shares & the balance in cash;
5.The DG may withdraw within 3 yrs if it appears that the transfer was
made for some other purposes or if thr transferee co is NR in M’sia.

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Note:

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 Takeaways
1. What happens on the sale of real property.
2. How do you compute RPGT payable for an individual
3. What are the 2 possible value for DP
4. What are the 3 possible value for AP
5. What are the possible tax planning ideas.

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Summary: AP

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Exchanges: RP (A) for RP(B)

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Private Residence Exemption
Exemption available for one residential property only by an individual
(YA2006) --once in a life time.
Conditions for exemption:
Individual must be citizen or PR of Malaysia.
RP must be a residential property or part of building is used for residence.
The residential property is occupied or rented or fit for occupation.

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