Legal costs – what are the costs involved in respect of Real Property Gains Tax (RPGT)?

 

REAL PROPERTY GAINS TAX (RPGT)

Real Property Gains Tax (RPGT) is tax charged on gains arising from the disposal/ sale of real properties.

With effect from 1 January 2012, RPGT will be imposed at the effective rate of 10% on gains arising from the disposal of real properties within 2 years from the date of acquisition, for Sales & Purchase Agreement signed on or after that date.

The 5% rate will continue to apply for people selling in the third year through to the fifth year.

Calculation of RPGT

The calculation of RPGT is a follows; assuming that the property was purchased at RM400,000 and resold at RM500,000 within the first 2 years of its purchase;

Gain from disposal – waived exemption = Taxable gain

Eg. RM100,000 – RM90,000 = RM90,000

Chargeable RPGT is 10% of RM90,000 = RM9,000

 

Allowable loss

Allowable loss is a loss incurred after a property disposal and in this event tax relief is allowed under the following conditions:

  1. The disposal price is less than the earlier purchased price
  2. The disposal price is equal to the earlier purchased price.

 

Disposals not liable to RPGT

  • Disposal made after 5 years from the date of acquisition of the property
  • Gains on disposal
  • Gifts/ transfer of real property between:
    • Husband and wife
    • Parent and child
    • Grandparent and grandchild
  • Gains on disposal of residential property once in-a-lifetime for Malaysian citizen or permanent resident of Malaysia (Application for exemption must be made by filling up a Form under Section 8, RPGT Act 1976)

 

For any enquiries and informations, please contact us at +603 7729 9988 or enquiry@kimrealty.com.my