Malaysia RPGT (Real Property Gains Tax) 2012

Real Property Gains are gains arising from the disposal of a real property. During the Budget 2012, the Finance Minister proposed to revise Real Property Gains Tax (RPGT) rate as follows:

• Properties sold within 2 years from the date of purchase: RPGT = 10%
• Properties sold between 2 years & 5 years from the date of purchase: RPGT = 5%
• Properties sold after 5 years from the date of purchase: RPGT = 0%

(The current RPGT is 5% for all properties sold within 5 years from the date of purchase. )

The new rate will be effective starting Jan 1, 2012.  The most likely reason for this move by the government is to prevent property bubble by reducing speculation in Malaysian property market.

This RPGT rate increase however will not burden genuine property owners as there are exemptions:

• Disposal of residential property once in a lifetime by an individual who is a citizen or permanent resident of Malaysia.
• Gift between parent and child, husband and wife, grandparent and grandchild.
• For an individual, exemption up to RM10,000 or 10% of the net gains, whichever is higher.

RPGT is only chargeable on net gains, meaning all related costs such as purchase price, renovation costs and incidental costs such as legal fees and stamp duty are deducted from the sale price.