Exemptions on RPGT (No RPGT for Gains on Disposal of Property)

20507

Exemptions on RPGT (No RPGT for Gains on Disposal of Property)Certain gains on the disposal or transfer of properties are tax exempted, subject to the provisions of Real Properties Gains Tax Act, 1976.

Real Property Gains Tax (RPGT) exemptions are available in the following circumstances:

  • An individual who is a Malaysian citizen or a permanent resident will be given a once-in-a-lifetime exemption on any chargeable gain arising from the disposal of his/her private residence if he/she elects in writing for the exemption to apply to that private residence.
  • An individual will be given an exemption equal to RM10,000 or 10% of the chargeable gain, whichever is greater.
  • Gifts between husband and wife, parent and child or grandparent and grandchild are deemed to be “No gain no loss” transactions.
  • Transfers between companies:

(a) Transfers within the same group to bring about greater efficiency and for a consideration consisting substantially of shares in the transferee company.

(b) Transfers between companies for the purposes of reorganisation, reconstruction or amalgamation where the transferee company is being restructured to comply with the Government’s policy on capital participation in industry.

(c) Assets distributed by a liquidator under a scheme of reorganisation, reconstruction or amalgamation where the transferee company is being restructured to comply with the Government’s policy on capital participation in industry.

  • Transactions in which the disposal price is deemed equal to acquisition price (i.e. “No gain no loss” transactions):

(a)  Devolution of a deceased person’s assets to his trustee or legatee.
(b)  Transfer between spouses.
(c)  Transfer of assets owned by an individual, his wife or by an individual jointly with his wife or with a connected person to a company controlled by the individual, his wife or by an individual jointly with his wife or with a connected person, for a consideration consisting substantially (more than 75%) of shares in that company.
(d)  Transfer between an individual and a nominee who has no vested interest in the assets.
(e)  Transfer by way of security in or over an asset.
(f)  Gifts to the Government, local authority or charity exempt from income tax.
(g)  Disposal due to compulsory acquisition.
(h)  Disposal of chargeable assets pursuant to an approved financing scheme which is in accordance with Syariah principles, where such disposal will not be required for conventional financing schemes.

 

Exemptions via Gazette Orders which are currently available include:

  • Disposal of chargeable assets in relation to the Sukuk issued by the Malaysian Global Sukuk Incorporated.
  • Disposal of chargeable assets in relation to the Sukuk Bank Negara Malaysia – Ijarah issued or to be issued by BNM Sukuk Berhad.
  • Disposal of chargeable assets to Real Estate Investment Trusts and Property Trust Funds.
  • Disposal of chargeable assets in relation to the issuance of private debt securities under Islamic principles.
  • Disposal of chargeable assets:

(a) to or in favour of a special purpose vehicle; or
(b) in connection with the repurchase of the chargeable assets, to or in favour of the person from whom those assets were acquired, for the purpose of a securitisation transaction.

 

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56 COMMENTS

  1. Thank you for the information, Angelina. I have a question, is the any gains tax if transfer or sales among brothers & sisters? Thank you in advance.

  2. Hi, Angelina, referring to the same question from Kumar. I own a property (condo) jointly with my brother. He’ll be relocating to another state and wanted to transfer his half share of the condo to me (no monetery transaction is involved). We bought the property in Yr 2001 at RM150k and the current market value is approxiamtely RM290k. Would this transfer subjected to RPGT, since it is considered as a gift from my elder brother to me.
    Besides that, could we get discount for the stamp duty for the transfer document ?

  4. Hi NBC,

    what if i inherited from my late mom on a property (via will & grant of probate) and i decide to sell it? The property has been more than 10 years but due to decision of selling it, i have to change from my late mom’s name to my name in order to sell it..

    during the selling process, the lawyer took 2% for RPGT… am i still subjected to RPGT tax?

    • Hi Paul, it depends on when did you successfully own the property, regardless the age of the property or the duration of ownership under your late mom.

      It is a normal practice now that the lawyer will take 2% of the selling price for RPGT purposes. Until such confirmation has been received from IRB then the retention will be remit to IRB or return the to vendor.

  5. HI, Can a company pay only tax at the end of the fiscal year instead of the RPGT for the disposal of such property within 5 years. If yes, what is the requirement. Thanx

  6. Hi…Please help me on the below matter….I am getting conflicting answers pertaining to the RPGT.

    1) I would like to know whether RPGT also apply to acquirer of property by way of deed of gift, if I were to sell the property less than 5 years ?

    2) In Nov 2010, I get a property by the way of deed of gift from my sister, Nov 2010 till June 2012 > Since it was a gift from my sister. (No S & P)

    4) Will I need to pay 30K for the RPGT ?

    5) Can you please show me how is the actual calculation be ?

    6) Can I apply for the one time RPGT exemption ? I have sold a house before but it was more than 5 years house.

    7) I have call the lawyer office to ask about the RPGT rates for property sold below 2 years, and they tell me that they cannot let me know what is the actual rates 10% or 30% (saying that recently they got clients who sell their property below 2 years and the tax receive from RPGT is 30%)…This is really confusing me…

    Please help…………………..

    Thanks for spending your time go through my problem….

    TQVM !!! 🙂 Waiting for your reply urgently…..

  7. hi NBC,
    can you help on this? I inherited a piece of land from my late mom, and now decided to sell it to her brother’s children. the S&P between my mom and I was made in 2009, and we going to execute the docs next week. the lawyer will charged 2% for RPGT. My question is:
    1. is land subjected to RPGT?
    2. if yes, can i apply for exemption? this is my 1st S&P transaction.
    3. since 10%/5%/nul already been gazetted, why 2% is the normal practice?
    kindly help to clarify this …. thanks a lot!!

    • Hi Francine, the transfer of property from your late mom to you was considered “NO GAIN NO LOSS TRANSACTION”, where you have inherited/acquired/purchased the piece of land at the market value (of that point of time).

      1. Yes, Land is considered Real Property, thus it is subject to RPGT.
      2. You can’t apply RPGT exemption on vacant land, it is only applicable to Residential Property.
      3. It is what required by the LHDN to request the lawyers to retain 2% on the sales value of the property, regardless whether any gain. The reason is you do not need to wait for the assessment from LHDN to complete the S&P, where the assessment may only be issued by LHDN after 6 months to 1 year. The lawyer will refund to you once the confirmed tax is less than the retained tax.

  8. Dear NBC,

    I need some clarification coz i got all confused now.

    I will be getting my LA(Letter of Authority) from the high court to transfer all my mum’s assets to me coz she have pass away and there’s no will. If everything goes well, will be finalized by next year June 2013.

    If i decided to sell the house, what kind of tax will be imposed to me?

  9. Dear NBC,

    My mum and I inherited land from my late dad more than twenty years ago. There was a probate and a will. We transferred the land to our names officially around four years ago. My questions are

    1) If we were to sell the land, will we be subjected to RGPT? We have actually owned the property for some time and have a will and probate to proof it.

    2) If there is RGPT, how can the purchase value be determined as there was no gain ?

    3) If we would like to check how the calculation is derived after the RGPT is calculated , can we make an appeal , what is the process involved and how can we go about it ?

    4) Is there an Akta on this ? May I know where to get it ?

    5) Inheritance should not be subjected to tax inspite of when we change the name as we have a will and probate to proof it. Need your help to comment .

    Thank you

  10. Hi,
    My dad passed away in May 2012 and his property was disposed in Feb 2013.
    The lawyer has make a 2% retention amount to CKHT.
    The question is:-
    1). How do I know if the retention amount is sufficient..(called CKHT and they
    are unable to furnish me any info) cos I need to do the distribution according
    to my late dad’s will.
    2) Is the sale of my late dad’s property subject to tax??

    Thanks
    Erica

  11. My deceased mom left a property to my bro,sis & myself 10 months ago.
    Each of us own 1/3 share to the property. In the event i am going to buy over my bro & sis share,is there ant RGPT incurred to me? If Yes, since i am also holding 1/3 share as beneficiary to the property, i will be charged for the 2/3 which i am going to buy over from my bro & sis?

    • Hi Kenny, all of you would deemed purchased the property from your late mother at the market rate (10 months ago). Thus, the market rate is not much different compared with the currently one. As such, there would be not much gain, thus, not much RPGT.

      You will need not to pay RPGT as you are not the one who sell the property. But since not much gain from the disposal, your bro & sis will need to pay a very minimal RPGT (if there is any gain in market rate during this 10 months period)

      The purchase of property among brothers or sisters is still subject to RPGT.

  12. Hi,

    I am the executor of my relative’s will, and also inherited a property from her (1/2 share). The hearing date is on sept 2013, so if i sell the house now, will I be charged for the RPGT?

  14. Hi, My husband and I jointly bought our first house in Malaysia a couple of years ago (S&P under two names) and sold it with a gain after two years. We applied for the once-in-a-life-time RPGT exemption and we did not get taxed for RPGT and neither did we hear from IRD.

    Since every individual has one exemption, I wondered if it was necessary for us to utilise two exemptions for the first house back then. Can either of us apply for RPGT exemption again if we have a second home and sell it with a gain? This has been our doubt and I hope you could help us clear it. Appreciate your advice. Thank you

  15. I am a foreigner. My wife is Malaysian. We purchased a property in 2010, and it is on both our names. It is my wifes first property. How will RPGT be calculated if we would sell in January 2014?

    Is 50% of the property exempt from tax, because that is my wife’s share of the profit? And the other 50% of the profit will be taxed against 30%, because that is my share of the profit?

  16. Hi,
    I inherit a house from my dad last year and i intend to sell
    It now..Am I subject to RPGT and how is the value of house
    is determine?? ..at time when it was transferred to my name or
    at the time my dad bought the house..
    Thank you

    • Hi Erica, you inherited the house at the market value at time it was transferred to your name. (no gain no loss transaction).

      You will subject to RPGT if there is any gain from the disposal of that property.

  17. Greeting Angelina

    Hope you can help me on the RPGT matters as following:

    1. Bought a condominium @ 2012 for RM580,000.
    2. Planning to sell it for RM850,000 @ 2015.
    3. This will be my first time selling the property.
    4. So the gain will be RM850,000 – RM580,000 = RM270,000

    As pertaining to the once-in-the-lifetime RPGT exemption,

    – Am i entitle to full RM270,000 RPGT exemption or
    – 10% Exemption of RM270,000 RPGT?

    Thank you

  18. Dear Angelina,

    Me and my husband bought a second home (*Joint name) which is on Oct-2009, and now we are planning to sell our house by next year 2014.

    Shall we apply the once-in-the-lifetime RPGT exemption(*Which never apply before), since is still not more than 5 year from our purchase month& year.

    And could you advice how to apply this one-in-the-lifetime RPGT exemtion?

    Or for your opinion,we can apply any single name for this one-in-the-lifetime RPGT exemption or shall we wait after Sept 2014 than only sell our house?

    Thanks in advance for all your kind reply.

    • Hi Joanne, the key factor you need to consider is how much will be the gain and ultimately the possible property tax from the gain.

      As a married couple who have not utilised the claim before, you can’t claim separately.

      Your lawyer will do it for you, of course, at a fee, normally is RM200-RM300. Please specifically request your lawyer to claim or not to claim the exemption.

      As I’ve mentioned in my previous comments, don’t waste the exemption claim if the tax is not much.

      Also, think what is best for you after considering all the factors (market price, property tax, market trend, world economy).

      If it is worth to wait for a few month to lapse over the 5 years period, then go for it. Otherwise, think twice.

      Good luck to you, Joanne!

  19. Dear Angelina,
    Is there a difference between a inherited property and
    a property been given out of love from parents?

    Will the real property gain tax be calculated differently from
    this two scenario?

    My dad passed away last year and in his WILL he gave me a house..

    Will the IRB assess the house value which was bought in 1970 or at
    time I acquire it in 2012 as I want to dispose the house now.

    Thanks

    • Hi Erica, both are same, that is “no gain no loss” transactions and you are deemed to have purchased the property last year at last year’s market value.

      If you dispose it now and if there is any increase from last year’s market price, you will subject to RPGT

  20. Hi Erica
    I am a foriegner and inherited a condo over six years ago. I am thinking of selling the condo and want to know how much capital gain I will have to pay or will i be excempted.

  21. Dear Angelina,

    Recently I have purchased a property and it is going to be transferred sometime in January 2014. After one year, if the Government acquire my property at a higher price, will I be subject to pay for RPGT?

    Thank you.

    • Wilson, I don’t understand ” if the Government acquire my property at a higher price”?

      If the property is acquired under the national land code, it is free from RPGT.

  22. Hi Angelina.
    Can a property of both names (my husband n me) request for individual rax exemption?
    Neither my husband nor me have ever utilised the exemption yet.
    Or “husband n wife” exemption will be utilised both two names?
    Will we still have individual exemption after we go for “husband n wife” exemption?
    Many tks.

    • Angie, once you are married and the exemption can only be utilised collectively, not individually.

      Neither of you are able to claim RPGT exemption separately.

  23. Property purchased in year 2010, under Joint Holder A & B
    B is planning to sell his share in year 2014 to A. A will fully owe the property by then. A & B is friendship relation.
    If the RPGT apply to this condition?

  24. Hi Angelina
    My husband n I have a property under both names. My husband transferred his share of the property to my name last year. I have recently sold the said property and would like to exercise the once in a life time rpgt waiver. If I were to opt for the waiver, will my husband still be able to obtain the exception if he sells another property in his name only?

    Rgds
    Kathleen

  25. Me and my wife joint name on s&p with a condo.

    I’m malaysian and my wife from China, after 5 years does it RPGT exemption?

    Please advice. Thanks you

  26. Hi Angelina,
    Let’s say I bought a house with 100K then sell it within 3 years with 200K, Gain = 100K

    How much I need to pay when sign SnP?
    1. No need, wait lawyer proceed tax exemption.
    2. 2% of selling price(4k) to lawyer for LHDN RPGT deposit then wait refund.
    3. 30% of gain tax(30K) to lawyer for LHDN then wait refund.

    • Hi Chong, if this is your first sale of property & you opted for exemption, then No.1 will apply.

      If no, then No.3 will be very likely as the more the lawyer retained the safer are the lawyer.

  27. Dear NBC, i would like to ask:
    if i bought a property less than 5 years and I’ve decided to give the house to my friend as a gift and we are not related at all.
    Am i subjected or exempted from RPGT?

  28. hi, from above i understand if i gt a land fr my father before he passed away, i enjoy free rpgt, the time transfer to me(2011). Then, now i want to sell the land to 3rd party, i will be charged rpgt(2014). But can i know the gain is against (my father purchase price) or (the market price during the transfer)? As u mentioned above seem like market price but i read from article of I Property is the my father purchase price? SO?

  29. Hi Angelina,

    If i have a agriculture land which going to acquire by government, am i entitled for RPGT exemption?
    Thanks

    Regards,
    Alan

  30. Hi Angelina:

    If the property is under the company name, any ways to escape/defer the RPGT.

    if the company is property investment company would there made any different??
    Thanks.

    Sky Saw

    • @Sky, company is always subject to rpgt whenever there is gain from disposal of property under a company.

      That’s only different name in classifying the nature of the company’s activities, nothing to do in determining rpgt.

  31. Hi Angelina,

    My grandma passed away around 2005 and did a S&P ownership to me and my 2 brother at the value of RM1. However that time me and one of my brother was underage and my dad acted as guardian. We successfully manage to place our name into the geran at 2012 where me and bro manage to reach the age of 18. Right now i’m going to purchase the property at the price of $350,000. Will I be charged for RPGT?

    Thanks

  32. Hi, i am malaysian bought at house on year2011. this year i convert citizenship to singaporean, do i entitle for any RGPT exemption?thanks

  33. Hi Angelina,

    I own a property (apartment) jointly with my Sister. I am considering to transfer my half share of the property to my mother (non monetary transaction is involved). We bought the property in Oct’2011 at RM380k and the current market value is approximately RM550k. Would this transfer subjected to RPGT, since it is considered as a gift to my mother. And can I claim RPGT exemption if transfer as gift still subjected to RPGT?

    Besides that, could you please advise the total tax I shall pay? And could you please advise what is the legal fee for processing of the property transfer as gift.

    Thank you in advance.

  34. Dear Sir,

    1) Can I check with you, any proviso states that lawyer can retain a sum towards payment of the shortfall of the RPGT ?

    2) For the exemption of tax, is it applicable only to residential premises ? Does it cover commercial properties ? Is the exemption of tax applicable to a company too?

    Need your immediate reply. Thanks !

  35. Hi Angelina,

    Need your advice on the following:

    I understand that every individual is entitled to waiver of RPGT for 1 residential property in his/her life time.

    Is this waiver also applicable to service apartments (as service apartments’ usage is residential but the titles fall under commercial category?

    Awaiting your feedback. Thank you.

    • Hi Irene, if the serviced apartment carried with commercial title, even though it has been used for residential purposes, it is not considered residential unit in the eye of law. So no exemption will be given.

  36. Dear Angelina

    Me and my wife we bought a property in 2012 under joint name. We plan to sell this property sometime this or early next year and we are planning to do the following:
    1) Transfer the property to my name (no gain no loss under proviso)
    2) I will then sell the property at a gain and claim the once in a lifetime RPGT exemption

    Appreciate your advice if the above proposal is possible and doable? Thank you.

    • Hi SK, it is smart way but I need to highlight that even you have done it successfully, your wife is anyhow no longer entitled for any exemption as you have already claimed it. An exemption is granted to husband & wife collectively, not separately.

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