Real Property Gains Tax (RPGT) is a tax quite common among the real estate industry. It is a tax that you get from disposal or selling off property, a form of Capital Gains Tax.
So long as you are selling off a house, you will have to pay taxes for the profit you gain.
How to Calculate your RPGT?
The RPGT rate a person has to pay differs for everyone, depending on your entity, holding period, exemption waiver, and allowable cost. To calculate your tax, you have to know these four factors that will affect your RPGT rate.
RPGT is also applicable in the procurement and disposal of shares in companies where 75% of their tangible assets are in properties.
The RPGT Rate applies to 3 different entities; Citizens, Non-Citizens, and Companies. Each entity has a different RPGT rate applicable to them depending on the year of their property purchase. If you bought a property on your own and you are a Malaysian, you should be looking at the Citizen section.
The holding period is the number of years you have since purchased the property to the disposal date. If the property were bought in 2014 and was sold off in 2019, the holding period would be five years. As such, your RPGT rate would be the rating of the 5th year.
Allowable costs are the legal fees, advertisement charges, or even the stamp duty of the property. Thus, the miscellaneous charges.
You could get an exemption waiver on your RPGT of RM10,000 per transaction or 10% of profits. Depending on which is higher, it will be used as the waiver for your taxes. The exemption wavier on the taxable amount is only granted to individuals, whereas companies are not.
Once you know your factors, you can start calculating your RPGT!
Glancing at the RPGT chart, you should be able to know the RPGT rate for your property according to the earlier factors.
Depending on your entity and holding period, your RPGT rate would be in corresponding to those two factors.
Got your rate? Now is time to do the maths!
𝑁𝑒𝑡 𝐶ℎ𝑎𝑟𝑔𝑒𝑎𝑏𝑙𝑒 𝐺𝑎𝑖𝑛 = 𝐷𝑖𝑠𝑝𝑜𝑠𝑎𝑙 𝑃𝑟𝑖𝑐𝑒 – 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝑃𝑟𝑖𝑐𝑒 – 𝐴𝑙𝑙𝑜𝑤𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 – 𝐸𝑥𝑒𝑚𝑝𝑡𝑖𝑜𝑛 𝑊𝑎𝑖𝑣𝑒𝑟
𝑇𝑎𝑥 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 = 𝑁𝑒𝑡 𝐶ℎ𝑎𝑟𝑔𝑒𝑎𝑏𝑙𝑒 𝐺𝑎𝑖𝑛 × 𝑅𝑃𝐺𝑇 𝑅𝑎𝑡𝑒
To get the fee you have to fork, you have to first calculate your Net Chargeable Gain. It is the deduction of the price you sold the property to the price you purchased the property, allowable cost, and exemption waiver. The amount is then multiplied by the RPGT Rate of the property which would then give you your RPGT.
The only off chances that you do not get taxed is when you do not gain profit from the sale of your property. Therefore, when your net capital gain is negative. There are other exemptions allowed for RPGT too.
- One private residential property once-in-a-lifetime to an individual
- Disposal of real property between family members
- Exemption waiver
- Low cost, low-median cost, and affordable housing priced below RM200,000
Good news for property owners! According to Budget 2020 announcement, the market value will be set on 1 January 2013, engendering a lower tax payment to those who bought a property before the 1 January 2000.