RPGT Tax Guide For Homeowners

A Real Property Gains Tax (RPGT)  is the imposition of tax on your profits from selling a property. In simpler terms, if you own a house and plan to sell it one day, you will have to pay tax to the government for the gains a.k.a profits you’re going to receive.

However, this tax will be imposed only when the disposal or selling price is greater than the purchase price of the property. If you’re not making a profit, you will not be charged RPGT.

This tax must be paid within 60 days of the sale of the property. However, it is advisable to get it done much sooner.

It is important to note that RPGT is not only applicable to residential properties, but also commercial properties, estates, and empty lands. In this article, we’re going to focus on the sale of residential properties.

How does RPGT work?

RPGT is only imposed on the net chargeable gain from your sale. It is charged on the profit you made, minus any waivers or deductible costs. It sounds complex, but is very easy to understand.

There are a few steps to arrive at the RPGT tax amount you are charged.

1. Calculate your chargeable gain

First, we need to know your chargeable gain amount.

Budget 2020 also revised the base year of assessment from 2000 to 2013, changing how your chargeable gain is calculated if your property was bought before the base year. From 1 January 2020, the purchase price of your property is calculated starting from 2013; even if you bought it much earlier.

For example:

The market value of your property in the year 2013 is set by the Inland Revenue Board (IRB) and the Valuation and Property Services Department (JPPH). If you disagree with this value, you can challenge it, but you’ll need to engage the services of an independent registered valuer.

2. How to get the net chargeable gain amount

Now, let’s move on to net chargeable gain:

3. RPGT tax rate x net chargeable gain = total RPGT to pay

Hence, the total amount of RPGT you will be paying is as follows:

4. Know the current exemption waivers and allowable deductible costs

The only things you need to be concerned about are: the exemption waiver and allowable costs.

The exemption waiver is RM10,000 or 10% discount on the net chargeable gain (whichever is higher) to reduce the amount you’ll end up paying in taxes. There is also an exemption for those selling properties worth less than RM200,000.

Aside from the exemption waiver, you can also deduct allowable costs. These are things like stamp duty, legal fees and advertising fees, administrative fees, and repairs and renovations.

5. Understand the holding period to avoid RPGT tax

Finally, your tax rate will be determined by the holding period, which is the number of years you have owned the property. See the tables below for the tax rates:

From January 2022 onwards, the RPGT rates are as below (for individuals who are citizens or permanent residents of Malaysia):

According to Budget 2022, the government will no longer impose Real Property Gains Tax or RPGT for property disposals by individuals comprising Malaysian citizens and permanent residents starting from the sixth year.

Now that you have figured out how to calculate your RPGT tax rates, let’s look at how you can make the payments.

How to pay RPGT? 

Generally, your lawyer will handle the details and calculations for you; but if you want to do it yourself, here’s where to get started:

1. Download forms the required forms from IRB’s website. These are a few forms you need to fill up for your RPGT taxes.

Disposer

• Form CKHT 1A – Disposal of Real Property
• Form CKHT 1B – Disposal of share in Real Property Companies (RPC)
• Form CKHT 3 – Notification of Disposal of Asset not Subject to Tax or Exempt from the Payment of Tax

Acquirer

• Form CKHT 2A – Acquisition of Real Property / Shares in RPC

2. Prepare relevant documents for RPGT like the sale and purchase agreement, as well as receipts from your legal fees, advertising costs, and renovation fees to justify your deduction of allowable costs.
3. Each disposer and acquirer is required to submit form CKHT 1A / CKHT 1B and CKHT 2A to the IRBM Office where the income tax file is handled or nearby HASiL Office.
4. Wait for your confirmation notice!

e-CKHT

1. Submission of Online Form CKHT 1A / 1B / CKHT 2A / CKHT 3 thru e-CKHT platform is available at MyTax via https://mytax.hasil.gov.my/.
2. Disposal and acquisition information in e-CKHT must be completed accurately and submitted online. (The disposer or acquirer is required to keep the disposal, acquisition and expense claims supporting document for review if requested by IRB)
3. RPGT Form submitted thru e-CKHT and confirmation of receipt of the RPGT Forms can be printed or saved.
4. Disposer and acquirer may reverify the receipt of the RPGT Forms submitted thru e-CKHT via IRB website.

What if I want to get out of paying RPGT? Are there any RPGT reliefs or exemptions I can make use of?

Actually, there are four:

• The first exemption we’ve already applied above – which is 10% of profits OR RM10,000 per transaction. This applies to every transaction you make.
• You’re exempted from RPGT if the disposal of property happens between you and a spouse, between parents and children, grandparents or grandchildren by way of a gift. It will be assumed that you received no gain or suffered no loss from the transaction.
• If you own a medium or low-cost property that is RM200,000 or below, you are also exempted from RPGT when selling.

With this guide, we hope you have a better understanding of how RPGT works, and how to file for it in case you’re planning to sell a property in the near future.

This article has been updated on April 17, 2024.