Exemption for Malaysia Real Property Gains Tax

Government has re-imposed the Real Property Gains Tax (RPGT) in the Budget 2010 and a flat rate of 5% gains tax is payable on disposal of any real property within 5 years of purchase only with effective from 1 January 2010.

Real Property 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 as requested.

There are three circumstances where the property owner is exempted from the 5% RGPT:-

(1) Minimum exemption of RM10,000 gain or 10% of the chargeable gains, which ever is the higher

For example, a property owner sell his property on 1.1.2010,

(i) if he has made a gain of RM100,000,
the amount exempt from gains tax would be RM10,000 (that is, RM100,000 x 10% = RM10,000).
(ii) if the gain is RM200,000,

10% of the gain will be RM20,000 (i.e. RM200,000 x 10% = RM20,000) i.e. more than the minimum exemption of RM10,000.

Since the sum of RM20,000 is higher than the minimum exemption of RM10,000, the property owner is entitled to an exemption of the higher amount of RM20,000.
[Note: Deductible expenses have not been taken into account in the calculation. Such expenses reduce the amount of gains tax payable.]

(iii) if the gain is RM50,000,

10% of the gain will be RM5,000 (that is, RM50,000 x 10% = RM5,000) i.e. less than the minimum exemption of RM10,000.

This amount is less than the minimum exemption of RM10,000, the seller is therefore entitled to the minimum exemption of the higher sum of RM10,000. He is allowed to deduct RM10,000 from his purchase price, and not merely RM5,000 (10% of the gain).
(2) Gifts between parent and child, husband and wife, grandparent and grandchild; and

(3) Disposal of a residential property once in a lifetime.

You may check out at:

http://www.hasil.gov.my/lhdnv3/index.jsp?process=22000&menu1=0&m2=0&ms2=Cukai%20Keuntungan%20Harta%20Tanah&pg_title=Cukai%20Keuntungan%20Harta%20Tanah

for more details about RBGT.