Do you need to pay tax if you are selling your property?
Published: Fri, 07/01/22
The answer is "YES!"
BRIEF OVERVIEW OF REAL PROPERTY GAINS TAX
“If I want to sell my house or property, do I have to pay any tax?”
Well, the answer to that question is “Yes!”
The tax that would apply to such a transaction is called the Real Property Gains
Tax (RPGT).
Governed by the Real Property Gains Tax Act 1976 (RPGTA 1976), RPGT refers to the tax levied on profits arising from the disposal of real property or real property company (RPC) shares in Malaysia. This means it is a tax
that is payable by the seller of a property when the resale price is higher than the purchase price.
What is considered “Real Property”?
“Real Property” is defined as any land situated in Malaysia and any interest, option, or other rights in or over such land (for example houses, commercial buildings, farms, and vacant land).
Whether you are a Malaysian resident or not, gains accrued on the disposal of real property situated in Malaysia are taxable.
What constitutes “disposal”?
“Disposal” is generally triggered upon transfer of ownership from one person to another by way of sale, conveyance, assignment, settlement, or alienation whether by agreement or by force of
law.
Who is considered “a person” for RPGT purposes?
A person includes an individual, company, limited liability partnership, partnership, organisation, trustees, and other chargeable persons.
Key Issues Regarding RPGT
As stated in the Finance Act 2021 gazetted on 31 December 2021, RPGT will no longer be imposed on property disposals by individual resident owners starting from the 6th year, with effect from
1 January 2022.
The percentage of the tax chargeable varies according to the disposal period and whether or not the person is a permanent resident of Malaysia. Do note that if you are not a Malaysian citizen or permanent resident, or if you are a company, RPGT will still apply even after the 6th year.
Since the RPGT applies to profits, the government does provide tax
relief when there’s no profit made at all, like when the selling price is equal to the purchase price. The same would also be available to a person who suffers a loss from the property sold instead of a profit.
RPGT rates (Year of Assessment 2022)
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