Understanding Real Property Gains Tax (RPGT) in Malaysia: A 2025 Guide
Selling property in Malaysia? Then you’ll want to understand Real Property Gains Tax (RPGT). This tax is imposed on profits earned from selling real estate, and it’s a key factor in property investment decisions. Let’s break it down.
What is RPGT?
RPGT is a tax on capital gains from selling property in Malaysia. Essentially, if you make a profit from selling real estate, a portion of that profit goes to the government.
RPGT Rates for 2025
The rate you’ll pay depends on who you are and how long you’ve owned the property:
| Ownership Period | Individuals (Malaysians & PRs) | Companies & Foreigners |
|---|---|---|
| 1st year | 30% | 30% |
| 2nd year | 30% | 30% |
| 3rd year | 30% | 30% |
| 4th year | 20% | 20% |
| 5th year | 15% | 15% |
| 6th year onward | 0% | 10% |
Key Changes & Updates
The Malaysian government has made various adjustments to RPGT over the years. As of 2024, Malaysian individuals selling property after the 5th year enjoy zero RPGT, while foreigners still face a 10% tax.
How to Calculate RPGT
Here’s a simplified breakdown:
Formula:
RPGT = (Selling Price – Purchase Price – Allowable Expenses – Exemptions) × Applicable RPGT Rate
Example Calculation:
- Property Purchase Price: RM500,000
- Selling Price: RM700,000
- Legal Fees & Agent Fees: RM20,000
- Years Owned: 3 years (30% RPGT rate applies)
- Chargeable Gain: RM700,000 – RM500,000 – RM20,000 = RM180,000
- RPGT Payable: RM180,000 × 30% = RM54,000
RPGT Exemptions
Some exemptions can reduce your tax burden:
- One-time Exemption: Malaysians can enjoy a once-in-a-lifetime RPGT exemption on selling their residential property.
- RM10,000 or 10% Exemption: The higher of RM10,000 or 10% of chargeable gains is exempted from RPGT.
- Transfers Between Family Members: Transfers between spouses, parents, and children are RPGT-exempt.
How to Pay RPGT
- Submit CKHT 1A Form within 60 days of selling the property.
- Buyer’s Lawyer typically withholds 3% of the purchase price to settle RPGT.
- Pay RPGT to LHDN (Malaysian tax authority) based on final assessment.
Final Thoughts
RPGT is an important consideration in property transactions. Understanding the tax structure can help you plan your investments wisely and minimize your tax liabilities. If you’re unsure about RPGT calculations, consult a tax professional or use an RPGT calculator.
Need more updates on Malaysian property trends? Stay tuned!