Understanding How Real Property Gains Tax (RPGT) Applies To You In Malaysia

Author:Mr Jo Yan Lim and Mak Ka Wai
Profession:MahWengKwai & Associates
 
FREE EXCERPT

RPGT is a tax chargeable on the profit gained from the disposal of a property and is payable to the Inland Revenue Board. As such, RPGT is only applicable to a seller.

For example, A bought a piece of property in 2000 at a value of RM500,000. Subsequently, A sold the property to B at the value of RM700,000, gaining RM200,000 from the disposal of the property. The RPGT is calculated for RM200,000.

Here are some frequently asked questions which may be relevant in understanding the concept of RPGT and how it applies to you:

What is the applicable rate?

The effective RPGT rates are as follows:

Date of Disposal Companies Individual (Citizen & Permanent Resident) Individual (Non-Citizen) Within 3 years from the date of acquisition 30% 30% 30% In the 4th year 20% 20% 30% In the 5th year 15% 15% 30% In the 6th year and subsequent year 5% 0% 5% When do I have to pay RPGT?

As prescribed by law, the purchaser's solicitors are required to retain 3% of the purchase price from the deposit and remit the same to the Inland Revenue Board within sixty (60) days from the date of the sale and purchase agreement to meet the RPGT payable.

In instances 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.

What is the consequence of late payment?

Any payment after 60 days may attract a penalty payable by the seller. The penalty is 10% of the amount payable as RPGT.

Am I required to do the documentation on my own?

The seller may opt to file the necessary forms with the Inland Revenue Board individually or seek assistance from the solicitors at a fee prescribed by the Solicitors Remuneration Order 2006.

What if I sell the property at a loss? Am I still required to pay RPGT?

RPGT is only chargeable if there is a profit gained from the disposal of the property. As such, if the disposal price is lower than the acquisition price, there is no profit gained and therefore no RPGT is payable.

Likewise, if the disposal price is equal to the acquisition price, there is neither a chargeable gain nor an allowable loss. As such, no RPGT is payable.

Am I entitled to any deductions?

The RPGT Act 1976 allows certain incidental costs of the acquisition of the property and disposal of the property to...

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