During the recent budget 2013 announcement, effective from 1st Jan 2013, the real property gain tax (RPGT) will be increased to 15% for any property held and disposed within two (2) years. For properties held and disposed within a period exceeding two year but not more than five years, the property tax increased from 5% to 10%, while properties held and disposed after five years are not subject to any real property gain tax.
Real Property Chargeable Gains are gains derived from disposal, sell, convey, assign, transfer, settle or alienate whether by agreement or by force of law which fall under chargeable asset. All chargeable assets must be made during the year of assessment and all particulars must be furnished to the Inland Revenue Board of Malaysia as requested.
Here is the format of RPGT computation
Example to Illustrate the Calculation of Real Property Gain Tax Payable
Mr Tan bought a double storey terrace house directly from a property developer on 1st Jun 2011 at a price of RM 400,000 and sold his property on 1st Jan 2013 at RM 600,000 (this property is sold within two (2) years from the date of purchase).
The computation of RPGT is as follows :-
A) Disposal Price = Consideration received – Incidental cost – Permitted expenses
B) Acquisition Price = Consideration paid + Incidental cost
C) Chargeable gain = Disposal price – Acquisition price
D) Net chargeable to be taxed = Chargeable gain – exemption for individual (RM 10,000 or 10% of the chargeable gain whichever is higher)
Let say the total incidental costs plus the permitted expenses during disposal of the property was RM 40,000 and RM 15,000 for incidental cost involved during the acquisition stage.
Disposal price = RM 600,000 – RM 40,000 = RM 560,000
Acquisition price = RM 400,000 + RM 15,000 = RM 415,000
Therefore the chargeable gain = RM 560,000 – RM 415,000 = RM 145,000
Net chargeable gain to be taxed = RM 145,000 – RM 14,500 = RM 130,500
Mr Tan sold his property within 2 years from the date of acquisition, so the tax imposed on RPGT was 15%
Tax payable = RM 130,500 x 15% = RM 19,575
Exemption from RPGT
There are three circumstances where the property seller is exempted from paying RGPT.
- The level of exemption is increased from RM5,000 to RM10,000 or 10% of the chargeable gains, which ever is the higher
- Gifts between parent and child, husband and wife, grandparent and grandchild; and
- Disposal of a residential property once in a lifetime.