RPGT and Available Exemptions
Real Property Gains Tax (“RPGT”) is a tax levied by the Inland Revenue Board (IRB) on profits arising from the disposal/selling of real properties. The RPGT rates effective from 1 January 2019 are as follows:-
| Disposal | Citizen/PR | Non-Citizen/ Non-PR / Company Not Incorporated in Malaysia | Company Incorporated in Malaysia |
|---|---|---|---|
| First 3 years | 30% | 30% | 30% |
| 4th Year | 20% | 30% | 20% |
| 5th Year | 15% | 30% | 15% |
| 6th years onward | 5% | 10% | 10% |
The following are some popular instances where you can be exempted from RPGT:-
Exemption under PENJANA
As announced under the National Economic Recovery Plan (PENJANA) in year 2020, a citizen of Malaysia can be exempted from RPGT in respect of gains on the disposal of up to three residential properties from 1st June 2020 until 31st December 2021.
Residential property means a house, a condominium unit, an apartment or a flat in Malaysia, and includes a serviced apartment and a small office home office which is used only as a dwelling house. In the event that more than three units of residential properties are being disposed of during this period, the disposer may elect any three units to be exempted.
Also, to be eligible for this exemption, the residential property disposed of must not be acquired between 1st June 2020 and 31st December 2021 by way of transfer between spouses, or by way of gift between spouses, parent and child, grandparent and grandchild.
Once-in-a-lifetime exemption
A citizen or permanent resident of Malaysia may elect the application of once-in-a-lifetime exemption on any RPGT from the disposal of a private residence. A private residence is defined as a building or part of a building owned by an individual or occupied as a place of residence.
Gift within family
Where a property is transferred by way of gift within the family, either between husband and wife, parent and child, or grandparent and grandchild, the disposer is deemed to receive no gain and suffer no loss on the disposal, hence is not liable for RPGT. However, any transfer between siblings is still subject to RPGT. To be qualified under this exemption, the disposer must be a citizen of Malaysia.
Asset not exceeding RM200,000
For disposal of asset (other than shares) of RM200,000 and below in the 6th and subsequent years after acquisition, a Malaysian citizen is exempted from payment of RPGT on the chargeable gain accruing on the disposal. This exemption is mostly beneficial to disposer in selling any low-cost house.
Individual 10% exemption
An individual may enjoy RPGT exemption for an amount of RM10,000 or 10% of the chargeable gain, whichever is greater, for each disposal of real property. This type of exemption can be enjoyed by both local and foreign individual.