RPGT: How to calculate (or determine) the purchase price for a property?

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RPGT: How to calculate (or determine) the purchase price for a property?Many have raised a question on how to calculate or determine the purchase price for a property in RPGT.

The right and correct purchase price for your property is not only to inform the actual costs that you’ve paid for your property, but it is also important to reduce your possible RPGT when you have decided to dispose of your property for an awesome profit. 🙂 

The actual costs of a real property may consist the following:

  1. purchase consideration that paid to own the property (S&P price)
  2. stamp duty on transfer
  3. legal fees (buy & sale property)
  4. legal fees (conversion of title)
  5. tax agent fees (filling up RPGT form)
  6. valuation fee
  7. cost of advertisement
  8. cost of extension to property
  9. brokerage or estate agent’s fee
  10. loan interest (refer note below)

Interest cost as incidental cost

Properties under work in progress scheme and direct purchase from developers can include the interest expenses as part of the purchase cost of the property.

The interest must be incurred and paid by the purchasers from the date of signing the sale & purchase agreement up to the issuance of certificate of fitness (CT).

What is Real Property?

Real property is defined in the Section 2 of the Real Property Gains Tax Act 1975 to mean any land situated in Malaysia and any interest, option and other right in or over such land.

Land is further defined to include the following:

  1. the surface of the earth and all substances forming that surface;
  2. the earth below the surface and substances therein;
  3. buildings on land and anything attached to land or permanently fastened to anything attached to land (whether on or below surface);
  4. standing timber, trees, crops and other vegetation growing on land; and
  5. land covered by water.

Put it short, the land and everything above or under the land is considered real property. 🙂

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3 COMMENTS

  1. Could you advice, penalty charges on early settlement of the loan taken to finance the property, is that counted as cost?

    • Hi Jessica, the penalty charges is the price you need to pay for discontinue or full settlement of loan agreement with bank within the stipulated period.

      It is not direct cost incurred in relation to the acquisition of property, so it is not counted as cost.

  2. My wife owns a condo in Kuala Lumpur which she obtained as a inheritance. the condo is over five years old. How will the property taxes affect me if I sell the condo over the next few months. When are the changes to the tax in the 2014 budget effective. my wife is a Canadian citizen.

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