RPGT Exemptions and the CKHT Forms

The most valuable RPGT relief in the Act can be used exactly once, and most people spend it on the wrong property — usually the first one they sell, which is rarely the one with the biggest gain.

The once-in-a-lifetime private residence exemption

Section 8 exempts a gain accruing to an individual who is a citizen, or an individual who is not a citizen but is a permanent resident, on the disposal of his private residence. Permanent residents qualify; this is routinely misreported as citizens-only.

Paragraph 9(1) of Schedule 3 supplies the limit. The individual is entitled to the exemption in respect of one private residence only, provided that:

• he elects that the exemption apply to that residence;
• on the election being made, there is no further exemption for the disposal of any of his other private residences; and
• the election is in writing to the Director General and is irrevocable.

Paragraph 9(2) blocks the election where an exemption was already granted under repealed provisions of the Act or under the repealed Land Speculation Tax Act 1974.

If you own two properties and expect to sell both, model the gain on each before electing. The relief cannot be undone.

The Schedule 4 exemption

Separately, and available on every disposal rather than once, Schedule 4 exempts RM10,000 or 10% of the chargeable gain, whichever is greater, for a chargeable gain accruing to an individual. Companies get nothing.

Family transfers: a closed list

Paragraph 12(1) of Schedule 2 deems a gift to be a disposal at market value, so a gift is normally a taxable event even though no money moves.

Paragraph 12(2) carves out transfers where the donor and recipient are husband and wife, parent and child, or grandparent and grandchild. In those cases:

• the donor is deemed to have received no gain and suffered no loss, but only if the donor is a citizen; and
• the recipient inherits the donor’s acquisition price plus the donor’s permitted expenses.

Three things people get wrong here:

• Siblings are not on the list. Brother-to-sister transfers are taxed at market value. The list is closed.
• The citizenship test attaches to the donor, not the recipient.
• The relief defers rather than forgives. The recipient takes over the original cost, so the whole accumulated gain surfaces on their eventual sale.

Separately, paragraph 3(1)(b) deems disposal price to equal acquisition price for transfers between spouses, between former spouses under a court order dissolving a marriage, and certain transfers to a controlled company.

Which CKHT form

Form	Who files it	What it covers	Deadline
CKHT 1A	Disposer	Disposal of real property	60 days from disposal
CKHT 1B	Disposer	Disposal of shares in a real property company	60 days from disposal
CKHT 2A	Acquirer	Acquisition of real property or RPC shares	60 days from acquisition
CKHT 3	Disposer	Notification under s.13(6) that the disposal is not chargeable or is exempt	60 days from disposal

The private residence election is made through CKHT 3.

The acquirer’s retention duty

Under s.21B the acquirer — not the seller — must retain part of the consideration and pay it to the Director General within 60 days of the disposal:

• 3% as the default, under s.21B(1);
• 5% where the disposer falls under Part II of Schedule 5 and the disposal is within three years of the acquisition date, under s.21B(1A)(a) — reverting to 3% thereafter;
• 7% where the disposer falls under Part III, under s.21B(1A)(b).

Failure to pay increases the amount by 10% under s.21B(2), and that sum is a debt due from the acquirer to the Government, payable forthwith.

The escape route is s.21B(5): where the disposer serves a valid CKHT 3 notice on the acquirer within 60 days, the retention duty does not apply at all. If the acquirer under-remits because the disposer’s CKHT 3 was wrong, s.14(5) shifts the 10% onto the disposer.

Common mistakes

• Electing the private residence exemption on the first sale by reflex. It is irrevocable and can only be used once.
• Assuming siblings qualify for the love-and-affection treatment. They do not.
• Treating the family transfer as a permanent saving. It rolls the gain forward into the recipient’s hands.
• Buyers ignoring the retention duty. The 10% increase lands on the buyer.
• Filing CKHT 3 late. Serve it inside 60 days or the retention obligation stays live regardless of the exemption.

What’s next

Decide which property the once-in-a-lifetime election is worth spending on before any sale completes, and get the CKHT 3 to the buyer’s solicitor inside the 60-day window so the retention is never triggered. Where the disposer is a company, none of these exemptions apply.