For Persons
For citizens, permanent residents, non-citizens, and foreigners, the following formulas apply. Depending on their holding time and residential status, their RPGT rates will change (Rpgt for commercial property).
On Net Chargeable Gains, RPGT is assessed.
Acquisition price minus disposal price is Gross chargeable gain.
Gross Chargeable Gain – Allowable Expense – RPGT Exemption – Allowable Loss = Net Chargeable Gain.
Tax payable = RPGT Rate X Net Chargeable Gains (depending on the number of years of property ownership).
Example:
For illustration, suppose Adam and Hanis, both nationals of Malaysia, paid $300,000 on January 4, 2013, to purchase a condo in Hartamas. They chose to move up to a larger home in preparation for starting a family, and on January 20, 2019, they sold the condominium for RM500,000.
RM 500,000 less RM 300,000 equals RM 200,000 in Gross chargeable gain.
Assuming Adam has an RM 30,000 allowable expense and an RM 20,000 RPGT Exemption (10% of earnings) (200,000 x 10 percent )
RM 200,000 less RM 30,000 minus RM 20,000 is RM 150,000 in Net chargeable gain.
Tax Payable = RPGT at 5% times RM150,000, or RM7,500.
As the property holding period is five years, the RPGT rate is based on the Budget 2019 for Individual Citizens disposal in the fifth year.
For Businesses
Cost of acquisition: A/B x C, where
A represents how many shares the shareholder owns;
B is the number of the company’s issued shares.
C represents the defined value of the real estate at the time the chargeable item was acquired.
Disposal price minus purchase price is Gross chargeable gain.
Gross Chargeable Gain – Allowable Expense – RPGT Exemption – Allowable Loss = Net Chargeable Gain.
Tax Payable = RPGT Rate x Net Chargeable Gains (depending on the number of years of property ownership).
Example:
On January 1, 2013, Synergy Sdn Bhd was established, with Mr. Andrews, Mr. Brian, and Mr. Tate each owning 100,000 shares. At the time of its incorporation, it wasn’t an RPC. But on March 31, 2015, the business paid RM 1.2 million for its sole piece of real estate. Its total tangible assets, including the real estate, increased to RM 1.5 million as a result, converting it into an RPC.
On January 31, 2019, Mr. Andrews made the decision to sell Mr. Lodge his 100,000 shares for RM 1 million.
Purchase Price: 100,000/300,000 times RM 1,200,000 equals RM 400,000.
Cost of disposal: RM 1,000,000
RM 1,000,000 – RM 400,000 = RM 600,000 Gross Chargeable Gain
*Presuming Mr. Andrews has RM 50,000 in allowable expenses, RM 600,000 in RPGT exemption (RM 600,000 x 10%), and RM 35,000 in allowable losses.
RM 600,000 – RM 50,000 – RM 60,000 – RM 35,000 = RM 455,000 Net Chargeable Gain
Taxable Payable = 30% RPGT X RM 455,000 = RM 136,500
As the property holding period is three years, the RPGT rate is based on the Budget 2019 for Companies disposal in the third year.
When should Malaysian RPGT be paid?
Locals and permanent residents who sell off property will have their lawyers hold back 3% of the selling price or disposal price when the buyer makes the initial down payment to purchase the property in order to pay the RPGT. This retention percentage is 7% for foreigners and non-citizens.
Within sixty (60) days of the date of the sale and purchase agreement, your solicitor will pay the RPGT due by submitting the required paperwork to the Inland Revenue Board.
How do I file a Malaysian RPGT?
The required forms can be downloaded from the IRB website or obtained from the closest LHDN branch by those who prefer to file their RPGT directly.
STEP 1: Complete the Sales and Purchase Agreement (SPA) form, the Disposal of Real Property (CKHT 1A) form, and any other paperwork necessary to substantiate the RPGT deductions you intend to take.
STEP 2: To apply for RPGT exemptions, complete the Notification under Section 27 in the RPGTA 1976 (CKHT 3) form.
STEP 3: Request that the buyer of your property fill out the Acquisition of Real Property (CKHT 4) form, which ordinarily accompanies a copy of the SPA.
STEP 4: Within 60 days of the sale, deliver all forms and accompanying documentation to the closest LHDN branch.
What effects does RPGT late payment have?
Any payment made beyond 60 days may be subject to a fee that must be paid by the seller. The fine is equal to 10% of the amount due as RPGT. Read RPGT in Malaysia: How Rates Varied Over Time for more information on the introduction of RPGT in Malaysia and how rates have changed over time. Recent exemptions, a quick history, and a computation.
If you still confused about how’s the calculation for Rpgt, check out with this article: Rpgt for commercial property
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