Understanding Malaysia’s Real Property Gains Tax (RPGT) – Part 1

🧾 Part 1 – Understanding Malaysia’s Real Property Gains Tax (RPGT): What Every Business and Individual Should Know

Introduction

Real Property Gains Tax (RPGT) has long been part of Malaysia’s tax system, designed to curb speculative property trading and ensure fairness in capital appreciation. As the economy evolves, RPGT remains a critical consideration for property investors, companies, and individuals alike.

What Is RPGT and When Does It Apply?

RPGT is imposed when you dispose of:

• Real property in Malaysia (e.g. land or buildings), or

• Shares in a Real Property Company (RPC) — that is, a company whose value is mainly derived from real property holdings.

You are taxed on the gain from the disposal (selling price minus acquisition cost and permitted expenses).

RPGT Rates

The longer you hold a property, the lower your RPGT rate — encouraging long-term investment.

Key Exemptions and Reliefs

IRB recognises several situations where tax should not apply:

• Private Residence Exemption: One property may be fully exempt if declared as a private residence under Schedule 3.

• Family Transfers: Transfers between spouses, parents and children, or grandparents and grandchildren qualify for “no gain no loss” (NGNL) treatment.

• Corporate Restructuring: Group reorganisations for genuine business purposes may qualify for NGNL relief under Paragraph 17 of Schedule 2 of the RPGT Act.

• Government Acquisitions: Compulsory land acquisitions are typically exempt.

Move to Self-Assessment (Effective 1 January 2025)

Starting 2025, RPGT shifts to a self-assessment system, similar to income tax.
Taxpayers must:

• Compute their own RPGT liability,

• Pay within 60 days of disposal,

• Keep supporting records for seven years, and

• File amendments within six months if necessary.

This change simplifies processing and encourages voluntary compliance.

Practical Tips for Taxpayers

• Track acquisition dates and costs early to avoid last-minute calculations.

• Maintain valuation reports and legal documents for audit purposes.

• Consult a tax advisor before transferring property within a group to determine eligibility for relief.

Conclusion

RPGT remains a cornerstone of Malaysia’s property tax framework. With the transition to self-assessment, accurate record-keeping and timely filings are more important than ever.
Understanding RPGT now also sets the foundation for grasping the broader Capital Gains Tax (CGT) regime that extends to other forms of investments — which we cover in Part 2.

Read Also:

Understanding Malaysia’s Real Property Gains Tax (RPGT) – Part 2

Disclaimer: This article is for informational purposes only and does not constitute any professional advice. Feel free to contact us to consult with our professional advisors team for personalized advice and guidance.

Source: https://www.hasil.gov.my/en/rpgt/