Real Property Gains Tax (RPGT) is a tax chargeable on the profit gained from the disposal of real property in Malaysia. For example, if a person bought a condominium at RM350,000 in 2004 and sold it for RM500,000 in 2007, the net profit gain from the disposal of the condominium would be subjected to RPGT. The net profit gain is derived from the profit gained from the sale (in this example: RM150,000) minus the miscellaneous charges such as legal fee, stamp duty, renovation cost, property agent fee, administrative fee, etc.
The RPGT is only applicable to the property seller and is only chargeable if there is a profit gained from the disposal of the property. If the disposal price is lower than the initial purchase price, there is no profit gained and therefore no RPGT is payable. Similarly, no RPGT is payable if the disposal price is equal to the initial purchase price, there is neither a chargeable gain nor an allowable loss.
As required by law, the purchaser’s lawyer is required to retain 3% of the purchase price from the deposit and remit the same to the Inland Revenue Board (Lembaga Hasil Dalam Negeri) within 60 days from the date of the sale and purchase agreement to meet the RPGT payable.
In situation where the consent of the State Authority is required to sell the property to a purchaser and/or charge the property to a financial institution, or a court order for sale is required to dispose of the property, remittance of the 3% of the purchase price may be deferred until such consent or court order for sale is obtained.
Any payment after 60 days may be subjected to penalty (e.g. 10% of the amount payable as RPGT) payable by the property seller.
Alternatively, the property seller may opt to file the necessary forms with the Inland Revenue Board individually or seek assistance from the lawyer at a fee prescribed by the Solicitors' Remuneration Order 2006 (refer to the Sales & Purchase Agreement Legal Fees Calculator).
The following disposals are not liable to RPGT:
- Disposal made after 5 years from the date of acquisition of the property by persons other than companies. non-citizen / non-resident individuals
- Transfer of assets by way of gift between:
2. Parent and child; and/or
