RPGT. What it means?

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RPGT stands for Real Property Gains Tax. Many people did not take notice of RPGT when they decided to buy a property. They will think that it will not affect them since they are buying for long term. I always stressed that RPGT should be one of the main ingredients in property planning as it will take a huge chunk of our profit.

How it is calculated? In simple terms, Tax payable = RPGT rate x net chargeable gain . Net chargeable gain means you take the profit from the property minus expenses like renovation, legal fees and agencies fee. Please be reminded that all deductions needs receipt for proof and it depends on Inland Revenue board approval.

For example for an individual property,

RM500,000  –

 RM400,000

100,000  –

8,000 (Legal Fees)

15,000 (Renovation)

           10,000 (agency fee)

           67,000 (Net chargeable Gain)

RM67,000 X 20% (4 Years) = RM 13,400 RPGT

Since our last budget on 2nd November 2018, it have change the property landscape. The policies have change.

Before the budget 2019 announcement the RPGT rates for individual property are

Year

Up to year 3

4

5

6 and above

RPGT Rate

30%

20%

15%

0%

 

With effect from 1st January 2019, the rates are as follows

Year

Up to year 3

4

5

6 and above

RPGT Rate

30%

20%

15%

5%

 

RPGT is no longer O% after 5 years but is chargeable at a rate of 5% thereafter.

As for those using company to buy the rates are also different now

Year

Up to year 3

4

5

6 and above

RPGT Rate

30%

20%

15%

10%

 

RPGT rates for company purchase is now 10% after 6 years instead of 5%.

If you are a foreigner buying a property in Malaysia the rates will be higher

Year

Up to year 3

4

5

6 and above

RPGT Rate

30%

30%

30%

10%

 

There are some exemptions and relief.

  1. Malaysia citizen who dispose property after 5 years of ownership for a sum of RM200,000 and below are exempted from RPGT.
  2. Malaysia Citizen and permanent resident are given a one-time exemption in a lifetime on RPGT for individual property.
  3. RM10,000 or 10% on net chargeable gain (whichever is higher) is given to individual owner.
  4. If the disposal of property is between husband and wife, parents and children , grandparents and grandchildren by way of gift and no profit, this will not be subjected to RPGT. The property must be owned by a Malaysian citizen.
  5. For disposal of property acquired before 1st January 2000, the property value will be based on 1st January 2000.

I hope that the above will give you more information while doing your planning. If you are into property investments be ready to pay the taxes. It can be a lot depending on your profit.

 From the desk of

Miichael Yeoh

Flyer100819

 

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