{"id":37817,"date":"2024-04-17T15:00:31","date_gmt":"2024-04-17T07:00:31","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=37817"},"modified":"2024-04-17T17:57:18","modified_gmt":"2024-04-17T09:57:18","slug":"rpgt-tax-guide-for-homeowners","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/rpgt-tax-guide-for-homeowners","title":{"rendered":"RPGT Tax Guide For Homeowners"},"content":{"rendered":"

A Real Property Gains Tax (RPGT)\u00a0 is the imposition of tax on your profits from selling a property. In simpler terms, if you own a house and plan to sell it one day, you will have to pay tax to the government for the gains a.k.a profits you\u2019re going to receive.<\/p>\n

However, this tax will be imposed only when the disposal or selling price is greater than the purchase price of the property. If you\u2019re not making a profit, you will not be charged RPGT.<\/p>\n

This tax must be paid within 60 days of the sale of the property. However, it is advisable to get it done much sooner.<\/p>\n

It is important to note that RPGT is not only applicable to residential properties, but also commercial properties, estates, and empty lands. In this article, we\u2019re going to focus on the sale of residential properties.<\/p>\n

<\/span>How does RPGT work? <\/strong><\/span><\/h2>\n

RPGT is only imposed on the net chargeable gain from your sale.\u00a0It is charged on the profit you made, minus any waivers or deductible costs. It sounds complex, but is very easy to understand.<\/p>\n

There are a few steps to arrive at the RPGT tax amount you are charged.<\/p>\n

1. Calculate your chargeable gain<\/h4>\n

First, we need to know your chargeable gain amount.<\/p>\n

Chargeable Gain = Disposal Price (Selling Price of Property) – Purchase Price<\/div><\/div>\n

Budget 2020 also revised the base year of assessment from 2000 to 2013, changing how your chargeable gain is calculated if your property was bought before the base year. From 1 January 2020, the purchase price of your property is calculated starting from 2013; even if you bought it much earlier.<\/p>\n

For example:<\/p>\n

You bought your house in 2005 for RM350,000. In 2013, it appreciated to RM600,000 but you decided to hold on to it. Then in 2022 you decide to sell the house for RM800,000.<\/p>\n

Due to the base year moving to 2013, your chargeable gain would only be RM200,000. As this is the difference between your Disposal Price and the value of the property in 2013.<\/div><\/div>\n

The market value of your property in the year 2013 is set by the Inland Revenue Board (IRB) and the Valuation and Property Services Department (JPPH). If you disagree with this value, you can<\/em> challenge<\/a> it, but you’ll need to engage the services of an independent registered valuer.<\/p>\n

2. How to get the net chargeable gain amount<\/h4>\n

Now, let\u2019s move on to net chargeable gain:<\/p>\n

Net Chargeable Gain = Chargeable Gain – Exemption Waiver [RM10,000 or 10% of Chargeable Gain; whichever is higher] – Allowable Costs<\/div><\/div>\n

3. RPGT tax rate x net chargeable gain = total RPGT to pay<\/h4>\n

Hence, the total amount of RPGT you will be paying is as follows:<\/p>\n

What you need to pay = RPGT Tax Rate (based on holding period) x Net Chargeable Gain<\/strong><\/div><\/div>\n

4. Know the current exemption waivers and allowable deductible costs<\/h4>\n

The only things you need to be concerned about are: the exemption waiver and allowable costs.<\/p>\n

The exemption waiver is RM10,000 or 10% discount on the net chargeable gain (whichever is higher) to reduce the amount you\u2019ll end up paying in taxes. There is also an exemption for those selling properties worth less than RM200,000.<\/p>\n

Aside from the exemption waiver, you can also deduct allowable costs. These are things like stamp duty, legal fees and advertising fees, administrative fees, and repairs and renovations.<\/p>\n

5. Understand the holding period to avoid RPGT tax<\/h4>\n

Finally, your tax rate will be determined by the holding period<\/strong>, which is the number of years you have owned the property. See the tables below for the tax rates:<\/p>\n

From January 2022 onwards, the <\/span>RPGT rates<\/span><\/a> are as below (for individuals who are citizens or permanent residents of Malaysia):<\/span><\/p>\n\n\n\n\n\t\n\t
Holding Period <\/td><3<\/td>4<\/td>5<\/td>>6<\/td>\n<\/tr>\n
RPGT Tax Rate <\/td>30%<\/td>20%<\/td>15%<\/td>0%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

According to Budget 2022, the government will no longer impose Real Property Gains Tax or RPGT for property disposals by individuals comprising Malaysian citizens and permanent residents starting from the sixth year.<\/span><\/p>\n

Let\u2019s look at an example:<\/p>\n

Michael is a Malaysian. He bought an apartment for RM300,000. five years later, he wants to sell off the apartment for RM 600,000. Before selling, he also spends RM20,000 on lawyers’ fees and some minor repair works.<\/p>\n

Chargeable Gain: RM600,000 – RM300,000 = RM300,000<\/p>\n

Net Chargeable Gain: RM300,000 – RM30,000 (10% of chargeable gain waiver) – RM20,000 (allowable costs) = RM250,000<\/p>\n

RPGT Rate (based on holding period) x Net Chargeable Gain<\/strong><\/p>\n

Since Michael has owned the property for five years, his RPGT rate will be 15%. Hence;<\/span><\/p>\n

Total RPGT RM250,000 x 15% = RM37,500<\/div><\/div><\/span><\/p>\n

Now that you have figured out how to calculate your RPGT tax rates, let\u2019s look at how you can make the payments.<\/p>\n

<\/span>How to pay RPGT?<\/b>\u00a0<\/span><\/span><\/h2>\n

Generally, your lawyer will handle the details and calculations for you; but if you want to do it yourself, here\u2019s where to get started:<\/span><\/p>\n

    \n
  1. Download forms<\/span><\/a> the required forms from <\/span>IRB\u2019s website<\/span><\/a>. These are a few forms you need to fill up for your RPGT taxes.<\/span><\/li>\n<\/ol>\n

    Disposer<\/h4>\n