Let’s all admit it, taxes in general can sometimes be ridiculously confusing. The Real Property Gain Tax is no exception but fret not for we’re here to help break it down!
Real Property Gains Tax (RPGT) is a tax levied by the Lembaga Hasil Dalam Negeri on chargeable gains derived from the disposal of real property. The rate of the RPGT varies based on citizenship of the property owner as well as whether you are an individual or an establishment.
As of now is the latest update we have on the RPGT 2020.
How do you calculate RPGT?
Although it sounds rather complicated, all you have to do is utilize one simple formula.
But how do you get get your chargeable gain? All you have to do is take the price the property is sold for and deduct it with the amount it was originally bought for. Here’s the formula:
Let’s try out a simple example
Let’s say you’re a Malaysian citizen who bought your 1999 house for RM230,000. Come January 2020, you sell it for RM660,000.
Assuming the market price on 1 January 2000 was RM250,000, and 13 years later on 1 January 2013 it’s increased to RM450,000.
The basic calculation of RPGT would be
Before Budget 2020 (base year 2000):
RM660,000 – RM250,000 = RM410,000
RPGT = RM410,000 x 5% = RM20,500
After Budget 2020 (base year 2013):
RM660,000 – RM450,000 = RM210,000
RPGT = RM210,000 x 5% = RM10,500
You would save 51% on your RPGT if you sold your property in 2020.
Real Property Gain Tax Exemptions
You’re in luck as there are certain exemptions allowed for Real Property Gain Tax, being:
- Anyone can benefit from a once-in-a-lifetime 100% exemption from RPGT when you sell your private residential property. (Please utilize this once in lifetime opportunity wisely).
- Transference of real property between family members (e.g. husband and wife; parents and children; grandparents and grandchildren) will also be exempted from property gains.
- 10% of profits OR RM10,000 transactions (whichever is higher) will not be taxable.
- Housing priced below RM200,000 (Low cost, low-medium cost and affordable homes will be exempted from RPGT.