Demystifying RPGT: An Insider's Guide to Malaysian Real Estate

Hello fellow travellers! Are you considering selling your property?

Brilliant! But before you have a pool party on your mind (because, let's face it, who doesn't love a pool party?)

There's one small hurdle to overcome: RPGT, also known as Capital Gains Tax.

Don't worry, it's not a monster under the bed.

RPGT is basically the tax you pay on the profit you make when you sell your property.

Think of it as a success bonus for your real estate project!

This article is a friendly guide that explains what RPGT is, how it is calculated and how you can avoid paying it altogether.

So, put on your favourite tune, settle in and let's learn!

RPGT Summary: Rates and Terms

The amount of RPGT you pay depends on how long you own the property before selling it.

Here's a quick overview (remember this applies to removal after 01/01/2023):

3 years and under: You pay the highest price which is 30% for everyone (citizens, permanent). residents and foreigners).

4 and Year 5: The rate drops slightly; Malaysians and permanent residents pay 15% and foreigners and companies pay 20%.

6 in and after: Here's the good news! Malaysians and Permanent Residents get full tax exemption, meaning you pay ZERO RPGT on properties you own for more than 5 years. However, foreigners and companies must pay 10%.

Calculating RPGT: The numbers don't bite (much)

The formula to calculate RPGT is quite simple:

Taxable. profit = selling price - purchase price - other expenses

Net Taxable Profit = Taxable Profit - Exemption (RM10,000 or 10% of Taxable Profit, whichever is higher)

Taxable Profit Tax = Net Taxable Profit x RPGT rate (based on holding period)

Feeling a little bad about these numbers?

Don't sweat it!

There are handy RPGT calculators online that can do the math for you in seconds.

Exceptions: Your RPGT Exemption Card

There are several ways to avoid paying RPGT.

Here are some of the more common exemptions:

Lifetime Exemption: This applies to the sale of your only home. Use it wisely, folks!

2022. 2018 Budget Exemption: If you are a Malaysian citizen, permanent resident or foreigner who has owned your residential property for more than 5 years, you will be fully exempt from capital gain. (wow!). This applies to a maximum of three properties per person, so choose wisely!

Conditional Contract Exemption: If you are selling a residential property that requires government approval, you may still be eligible for an exemption under certain conditions. .

Paying RPGT: Finding out LHDN

If you have to pay RPGT, you have 60 days from the sale of the property to pay the invoice with the Inland Revenue (LHDN).

There are two ways to do this:

Through your lawyer: Most estate lawyers can manage RPGT payments for you.

Direct to LHDN: You can fill the necessary forms and send them to the nearest LHDN office.

The Basics: Pro Tips for Malaysian Real Estate

Recording is key: Always keep good records of your purchase and renovation costs. They can help you reduce your tax benefits.

Get Professional Advice: If you are unsure about anything related to RPGT, be sure to consult a tax advisor or real estate attorney. They will help you navigate the process smoothly.

The Keys: You've got it!

Now you have the knowledge to play RPGT like a champion.

Remember that RPGT is not a penalty - it is simply a tax on your property income.

By understanding rates, exemptions and how they are calculated and paid, you will ensure a smooth and successful property sale.

So, go ahead and conquer the real estate market!

And hey, if you're looking for a good mortgage to finance your next home purchase, be sure to check out our mortgage comparison tool.

Selling your Malaysian property?

Don't get surprised by Real Property Gains Tax (RPGT)! Our fun and informative guide explains rates, exemptions, and how to calculate what you owe. Plus, free RPGT calculator and resources! Maximize your profits, not your tax headache. Read now!