While buying properties can be an exciting prospect that many people want to read and learn more about, understanding the implications of selling a property in Malaysia can be equally important.
For those who are considering to sell a property in Malaysia, it’s important to factor in Real Property Gains Tax (RPGT) – as it will directly impact your profits from the property investment.
Selling too soon after purchasing may result in higher tax rates, with long-term ownership gaining enjoying lower tax rates and even exemptions.
By understanding how RPGT works, including its rates, exemptions, and filing process, you can better plan your property transactions, maximise your returns, and avoid unexpected tax burdens.
#1 What Is Real Property Gains Tax (RPGT)?
RPGT is a tax on the profit you make when selling a Malaysia property, whether it’s a house, commercial building, vacant land, or even farmland. This tax applies to both locals and foreigners – as long as the property is in Malaysia.
This tax isn’t just for individual sellers either, as companies, partnerships, organisations, and trustees who sell properties also have to pay the RPGT. The Inland Revenue Board of Malaysia (IRBM) oversees this tax under the Real Property Gains Tax Act 1976, ensuring that anyone who profits from selling real estate contributes their share to the government.
In tax terms, “disposal” refers to any transfer of ownership, whether through sale, assignment, settlement, or other forms of transfer. So, if you’re thinking of flipping properties for profit or simply selling an existing one, it’s important to factor in the RPGT you have to pay when calculating your profits and how much cash you will get from the sale.
#2 RPGT Tax Rates And Exemptions In Malaysia
When selling a property in Malaysia, the RPGT rate depends on how long you’ve held the property before disposing of it. If you sell within the first three years, you should expect to pay a 30% RPGT rate across the board, whether you’re a Malaysian citizen, permanent resident (PR), foreigner, or company.
However, things start to differ from the fourth year onwards.
Real Property Gains Tax (RPGT) Rates
| When You Sell The Property | Malaysian Citizens and PRs | Foreigners | Malaysian Companies |
| After 1st year | 30% | 30% | 30% |
| After 2nd year | 30% | 30% | 30% |
| After 3rd year | 30% | 30% | 30% |
| After 4th year | 20% | 30% | 20% |
| After 5th year | 15% | 30% | 15% |
| After 6th year and beyond | 0% | 10% | 10% |
Source: Inland Revenue Board Of Malaysia (IRBM)
For Malaysian Citizens and PRs, the RPGT rate drops to 20% in the fourth year, 15% in the fifth year, and you are completely exempt from RPTG if you hold on to the property for at least six year.
In contrast, foreigners and Malaysian companies continue paying RPGT even after six years, with rates fixed at 10%. While the RPTG rate for companies decreases to 20% in the 4th year and 15% in the 5th year, foreign property buyers incur the maximum 30% RPTG rate if they sell before the 6th year.
This tax structure encourages longer term property ownership while discouraging speculative investments and short-term flipping. So, if you’re planning to sell, timing your sale strategically can significantly impact your profits.
#3 How to File RPGT?
Filing your RPGT may seem overwhelming, but the process is relatively straightforward if you follow the right steps.
First, you need to gather all necessary documents, including the Sale and Purchase Agreement (SPA) as proof of the transaction, the CKHT 1A Form for property disposal, and any supporting documents for deductions or exemptions if applicable.
Once you have everything prepared, the next step is to log in to the MyTax portal (https://mytax.hasil.gov.my/) using your Tax Identification Number (TIN). From there, navigate to the e-CKHT section, fill in the required details, and submit the necessary forms.
It’s crucial to submit your RPGT filing within 60 days from the date of the property’s disposal to avoid penalties. Late submissions can result in fines, so it’s best to complete the process as soon as possible.
By ensuring all documents are in order and submitting them on time, you can avoid unnecessary hassle and ensure compliance with Malaysia’s property tax regulations.
#4 RPGT Exemptions in Malaysia
To ease the financial burden on property sellers, Malaysia offers several RPGT exemptions. One of the most significant benefits is the once-in-a-lifetime exemption, where Malaysian citizens can enjoy a full RPGT exemption on the sale of a private residence, once in their lifetime. This can be a huge tax-saving opportunity, especially for homeowners selling their primary property – and can be useful if they are forced to do so either to upgrade to house a bigger family or downgrade as children leave the nest or if they find themselves in financial distress.
Another important exemption applies to family transfers. If a property is transferred between immediate family members, such as between spouses, parents and children, or grandparents and grandchildren, RPGT is fully exempted. This ensures that property can be passed down within families without incurring additional tax burdens.
Additionally, there is a chargeable gains waiver, which allows sellers to deduct either 10% of their chargeable gains or RM10,000 per transaction, whichever is higher. This waiver helps reduce taxable gains, making it easier for sellers to manage their RPGT liabilities. These exemptions provide significant relief for property owners and investors, so it’s worth knowing which ones you qualify for when selling a property.
#5 Plan Wisely, Minimise RPGT and Maximize Your Profits
Understanding RPGT is crucial if you’re planning to sell a property in Malaysia. The tax rates, exemptions, and filing requirements can significantly impact your profits, so being well-informed helps you make better financial decisions.
Whether you’re selling for profit, passing down property to family, or looking to minimize tax liabilities, knowing how RPGT works can save you from unexpected costs. Timing your sale strategically and taking advantage of exemptions can make a big difference in how much you take home.
So before putting your property on the market, make sure you’ve done your research and are fully prepared to navigate the RPGT process smoothly.
Read Also: Guide To Owning Multiple Properties In Malaysia
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