Real Property Gains Tax (RPGT) is charged on capital gains derived from the disposal of property. The keyword here is “gains”.
In simple terms, RPGT is calculated based on any gains made by the seller which is the difference between the selling price and his original purchase price (plus other incidental costs) of a property.
Below are the RPGT tier rates:
Note: The property holding period is calculated from the previous buying S&P Agreement date to the current selling S&P Agreement date.
RPGT is exempted for disposal of property (by a citizen or PR) if it is held for more than 5 years i.e. if you sell in the 6th year onwards.
RPGT exemptions are available for individuals, even if the property is disposed off within the first 5 years (from the date of purchase) in the following cases:
1. Exemption on gains from the disposal of a residential property once in a lifetime by an individual. Tip: When selling your property, do not exercise your exemption if your capital gains is little. Reserve your one-time exemption for future high capital gains.
2. Transfer as gifts between husband and wife, parents and child, grandparents and grandchildren (transfer between sibling/brothers or sisters is not applicable); and
3. Exemption of RM10,000 or 10% of the chargeable gain, whichever is higher, for each disposal of a property by an individual (not companies). See the calculation example below.
HOW RPGT IS CALCULATED?
Below is an example on how RPGT is calculated, assuming the property is disposed on the 4th year.
The “other costs” would include the following:
– Stamp duty
– Legal fees (buy & sale of property, conversion of title)
– Valuation fee
– Cost of advertisement
– Repair and renovation (include extension)
– Real estate agent’s fees
– Progressive interest paid to the bank (from date of signing of S&P to the issuance of certificate of fitness) while under construction by the developers).