Real Property Gains Tax (RPGT) When Selling Property

You sell a house at a profit — but before the money reaches your account, the government wants its share. That is RPGT, a tax that sellers often overlook until the lawyer withholds thousands of ringgit at the settlement table.

Real Property Gains Tax (RPGT) is charged on the gain you make when you dispose of property in Malaysia. It is enforced by the Inland Revenue Board (LHDN) under the Real Property Gains Tax Act 1976. How much you pay depends on two things: how long you have held the property, and whether you are a citizen, a company or a foreigner.

What are the RPGT rates?

RPGT rates are designed to curb short-term speculation. The longer you hold a property, the lower the tax. The rates are set out in Schedule 5 of the Act, which divides sellers into three categories.

Holding period	Citizen / PR (individual)	Company	Non-citizen
Year 1 to 3	30%	30%	30%
Year 4	20%	20%	30%
Year 5	15%	15%	30%
Year 6 and beyond	0%	10%	10%

Note the big difference in the sixth year. According to LHDN, effective 1 January 2022 (under the Finance Act 2021), RPGT is no longer charged on disposers under Part I of Schedule 5 of the RPGTA — that is, individual Malaysian citizens and permanent residents — who dispose of property after the fifth year; the rate for this category was reduced to 0%. Companies incorporated in Malaysia and non-citizens, however, remain bound by the minimum rate of 10% from the sixth year, no matter how long they have held the asset (Schedule 5 of the RPGTA; LHDN rate summary and PwC Worldwide Tax Summaries).

How is the chargeable gain calculated?

RPGT is not charged on the full sale price — only on the net gain. The basic formula is simple:

Chargeable gain = Disposal price − Acquisition price − Allowable expenses

The acquisition price is your original cost of buying the property, including legal fees and stamp duty at the time of purchase. Allowable expenses that can be deducted include:

• Costs that enhance or preserve the value of the property (renovation, improvement)
• Legal costs to establish or defend title
• Incidental costs of disposal — legal fees, real estate agent commission, stamp duty
• Compensation or insurance for damage to the asset

Once the gross gain is determined, every individual enjoys an automatic exemption under Schedule 4: RM10,000 or 10% of the chargeable gain, whichever is higher. Only the balance after this deduction is taxed.

Calculation example

Suppose Puan Aisyah, a citizen, buys a condominium in January 2020 for RM400,000 and sells it in February 2024 for RM550,000. The disposal falls in the fourth year of holding, so the rate is 20%.

Item	Amount (RM)
Disposal price	550,000
Less: acquisition price	(400,000)
Less: legal fees & stamp duty on purchase	(12,000)
Less: sale agent commission	(11,000)
Less: renovation costs	(20,000)
Chargeable gain	107,000
Less: exemption (10% × 107,000)	(10,700)
Net taxable gain	96,300
RPGT at 20%	19,260

Puan Aisyah pays RM19,260, not tax on the full RM550,000.

When is RPGT exempted?

Some disposals escape the tax entirely. The most useful for an ordinary homeowner are:

• Once-in-a-lifetime exemption — citizens and PRs can exempt the disposal of one private residence, once only in their lifetime. Claimed via the CKHT 3 form.
• Family transfers on the basis of love and affection — gifts between spouses, parents and children, or grandparents and grandchildren can be exempted; the disposal price is deemed equal to the acquisition price (no gain, no loss).
• Disposals to the government, approved charitable bodies, compulsory acquisition, and approved corporate restructuring.
• Transfers upon death to heirs and transfers by court order in divorce cases (for citizens).

How do sellers file RPGT?

RPGT uses a filing process separate from ordinary income tax. The first key is setting the disposal date correctly: it is the date the Sale and Purchase Agreement (SPA) is signed, not the date of key handover or transfer of title. If there is no written agreement, the date is when the transfer of title is completed or full consideration is received, whichever is earlier.

From that date, the clock starts ticking. Within 60 days, the following documents must be filed with LHDN, either online through the MyTax portal (e-CKHT) or at an LHDN office:

Form	Filed by	Purpose
CKHT 1A	Individual seller	Declare the disposal and gain
CKHT 1B	Company seller	Disposal by a company
CKHT 2A	Buyer	Notification of acquisition
CKHT 3	Seller	Claim an exemption

There is one mechanism that surprises many sellers: under Section 21B, the buyer is required to withhold part of the purchase price and remit it directly to LHDN (CKHT 502 form) as an advance tax payment on behalf of the seller. The withholding rate depends on the seller’s category — generally 3% for individual citizens/PRs, 5% for companies (effective 1 January 2022), and 7% for non-citizens/non-PRs. This money is deducted from your sale proceeds at the settlement table, so do not be surprised when the net amount received is lower than the sale price. If the actual tax is less than the amount withheld, the excess is refunded after assessment.

Failure to file within the time frame can lead to penalties. Late payment, too, can attract a penalty (please confirm the current rate on the official LHDN website).

What’s next

Before signing the SPA to sell, estimate your RPGT first — especially if you have held the property for less than five years, where the 30% rate can swallow a large part of the gain. Keep every relevant receipt: purchase legal fees, stamp duty, agent commission and renovation bills, because each one reduces your chargeable gain.

If you plan to sell your only residence, consider whether to save the once-in-a-lifetime exemption for a disposal with a larger gain. For cases involving companies, foreigners, family transfers or specific exemptions, consult a property lawyer or tax adviser, and confirm the latest rates and procedures on the official LHDN website (hasil.gov.my) before filing.