RPGT on Budget 2017
Since 2007, we have seen a gradual increase in the RPGT rate, from as low as 0% to as high as 30% as announced in Budget 2014. There has not been any adjustment to the rate since and it is maintained in Budget 2015 to the recent Budget 2017.
Meanwhile, the Government continues to provide RPGT exemptions for following:-
- RPGT exemption on gains from the disposal of one residential property once in a lifetime to all Malaysians and permanent residents
- Exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, for each disposal of a property by an individual and
- Transfer as gifts between parent and child, husband and wife, grandparent and grandchild; (No exemption for transfer between sibling)
Example to illustrate calculation of Real Property Gains Tax (RPGT) payable: Mr.X (Malaysian) purchased a property on year 2012 at RM100,000.00 and sold after or on Jan 1 2016 at RM200,000.00 (within five years of the date of purchase). He made RM100,000.00 from the transaction and the gains are subject to 15% RPGT.
RM100,000 (Property Gains) - RM10,000 (Waived Exemption) = RM90,000 (Taxable Gains)
RM90,000 (Taxable Gains) x 15% (RPGT Rate) = RM13,500 (RPGT Chargeable)
Withholding of RPGT
Effective January 1, 2015, where the consideration consists of wholly or partly of money, an acquirer of chargeable asset must withhold 3% of the total value of the acquisition price to be paid or the whole of that money to the IRB within 60 days from the date of disposal.
Basis Of Taxation
The chargeable gains arising from the disposal of any land situated in Malaysia and any interest, option or other right in or over such land or the disposal of shares in a 'real property company' is subject to Real Property Gains Tax.
The disposer of a real property has to submit the following to the IRB upon payment of the 3% retention sum within 60 days of the date of the sale and purchase agreement:
- Completed Form CKHT 1;
- Copies of stamped Sale and Purchase Agreement or Form 14A (memorandum of transfer) to prove the acquisition and disposal of the asset;
- Copy of grant/title deed (if any);
- Copies of bills and receipts for expenses claimed. (in case of companies or non-citizen and non-permanent resident individuals, details not required if asset is disposed in the sixth or subsequent year from the date of acquisition).
An acquirer has to submit the following to the IRB upon payment of the 3% retention sum within 60 days of the date of the sale and purchase agreement:
- Completed CKHT 2A forms;
- Copy of stamped Sale and Purchase Agreement or Form 14A (memorandum of transfer) to prove the acquisition;
- Copy of grant/title deed (if any).
Acquirer (or his solicitor) is also required to retain the whole of the consideration monies or a sum not exceeding two percent (2%) of the total value of the consideration whichever is the lower, within sixty (60) days from the date of disposal of assets.
Exemptions Available For Real Property Gains Tax (RPGT)
- A gain arising on disposal prior to 7 November 1975, the date of coming into force of the RPGT Act 1976.
- Exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, for each disposal of a property by an individual
- A gain accruing to the Government, a State Government or a local authority.
- A once in a lifetime exemption on a gain accruing to an individual who is a citizen or a permanent resident or to a husband and wife in respect of the disposal of two private residence (each for husband and wife as amended in Budget 2005).
- A gain equal to the amount of estate duty payable where the disposer is compelled to dispose the property in order to pay the estate duty.
- Disposal of assets to REIT and property funds
- Disposal of assets in connection with securitization of assets from 1 January 2001
- Gain accruing on the conveyance of chargeable asset upon conversion of a conventional partnership or private company to a limited liability partnership.
Several Transactions Where Disposal Price Is Deemed Equal To Acquisition Price:
- Transfer of assets between spouses.
- Gifts made to the Government, State Government, local authority or a charity exempt from income tax.
- Disposal of an asset as a result of a compulsory acquisition under any law.
- Disposal of an asset by a person to an Islamic Bank under a scheme where that person is financed by such bank in accordance with the Syariah.