RPGT Rates and How to Compute the Gain

Almost every RPGT guide in circulation prints one rate ladder: 30, 30, 30, 20, 15, 0. That ladder is real, but it applies to exactly one of the three classes of disposer in Schedule 5. Apply it to a Sdn Bhd and you will under-provide by 10% of the entire gain. Apply it to a foreign buyer reselling in year four and you will be out by fifteen percentage points.

The three rate ladders

Schedule 5 of the Real Property Gains Tax Act 1976 splits disposers into three Parts. These are the rates on LHDN’s published table for current disposals — Part I from 1 January 2022, Parts II and III from 1 January 2019.

Disposal in	Part I — citizens and permanent residents	Part II — companies incorporated in Malaysia, trustees, registered bodies	Part III — non-citizens, foreign companies, executors of non-citizen estates
Year 1	30%	30%	30%
Year 2	30%	30%	30%
Year 3	30%	30%	30%
Year 4	20%	20%	30%
Year 5	15%	15%	30%
Year 6 onward	0%	10%	10%

Two divergences matter commercially:

• Part III has no taper. A non-citizen pays the full 30% right through year five. The 20% and 15% steps simply do not exist for them.
• Part II never reaches zero. The 0% sixth-year rate that dominates public discussion is a Part I concession for citizens and permanent residents. A company that has held land for twenty years still pays 10% on disposal.

That last point catches family businesses constantly. Land bought by a Sdn Bhd in 2004 and sold in 2026 is a 10% event; the same land held personally is a nil event.

Building the computation

RPGT is charged on the chargeable gain, which is the disposal price less the acquisition price. Both figures are adjusted, and they are adjusted in opposite directions.

Acquisition price starts with the consideration paid and is increased by incidental costs of acquisition under paragraph 4(1) of Schedule 2 — fees, commission or remuneration for the professional services of a surveyor, valuer, accountant, agent or legal adviser, plus stamp duty.

It is then reduced by three categories of receipt:

• compensation received for damage to or depreciation of the asset — para 4(1)(a)
• insurance proceeds for damage or depreciation — para 4(1)(b)
• deposits forfeited to you on a cancelled transfer or disposal — para 4(1)(c)

Disposal price starts with the consideration received and is reduced by:

• expenditure on enhancing or preserving the value of the asset — para 5(1)(a)
• expenditure in establishing, preserving or defending title to or rights over the asset — para 5(1)(b)
• incidental costs of the disposal — para 5(1)(c) and para 6

What is never allowable: interest on capital borrowed to acquire the property, expenditure already deducted for income tax purposes, and the cost of submitting the RPGT forms themselves.

A full worked computation

Facts. Cahaya Bina Sdn Bhd, incorporated in Malaysia, bought a shophouse on 15 March 2021 for RM800,000 and sold it on 20 June 2026 for RM1,300,000.

On acquisition it paid legal fees of RM8,000, stamp duty of RM18,000 and a valuation fee of RM2,000. In 2022 it received RM30,000 from its insurer for fire damage to the rear section. Before the sale it spent RM120,000 extending the first floor and RM15,000 in legal costs defending a boundary claim. On the sale it paid RM39,000 agent commission and RM6,000 legal fees.

Step 1 — acquisition price

Item	Amount (RM)
Consideration paid	800,000
Add: legal fees on acquisition	8,000
Add: stamp duty	18,000
Add: valuation fee	2,000
Less: insurance recovery for damage	(30,000)
Acquisition price	798,000

Step 2 — disposal price

Item	Amount (RM)
Consideration received	1,300,000
Less: enhancement expenditure (extension)	(120,000)
Less: cost of defending title	(15,000)
Less: agent commission	(39,000)
Less: legal fees on disposal	(6,000)
Disposal price	1,120,000

Step 3 — chargeable gain

RM1,120,000 − RM798,000 = RM322,000

No Schedule 4 exemption is available: it is confined to individuals.

Step 4 — rate

Acquisition 15 March 2021 means the sixth year begins 15 March 2026. A disposal on 20 June 2026 is therefore a sixth-year disposal. Cahaya Bina is a Part II disposer, so the rate is 10%.

RPGT payable: RM322,000 × 10% = RM32,200.

Step 5 — what the buyer withheld

The acquirer must retain and remit under s.21B. Cahaya Bina is a Part II disposer selling in the fourth year or later, so the rate is 3% of the consideration: RM1,300,000 × 3% = RM39,000.

The retention exceeds the tax by RM6,800, which is refunded after the assessment is raised. Sellers routinely forget that the retained sum is a payment on account, not a penalty, and budget cash flow as though the money is gone.

The same numbers in different hands

Change one fact — the disposer is Encik Rahim, a Malaysian citizen, everything else identical.

• Chargeable gain: RM322,000
• Schedule 4 exemption: the greater of RM10,000 or 10% of the gain, so RM32,200
• Net chargeable gain: RM289,800
• Rate for a Part I sixth-year disposal: 0%
• RPGT payable: nil

Identical property, identical gain, identical timing. RM32,200 versus nothing, decided purely by which Part of Schedule 5 the disposer sits in.

Penalties worth pricing in

• Failure to submit CKHT 1A or CKHT 1B within 60 days — penalty of up to three times the tax, under s.29(3).
• Incorrect return — penalty equal to the undercharged tax, capped at 100%, under s.30(2).
• Acquirer fails to retain and remit — a 10% increase on the unpaid amount under s.21B(2), recoverable from the acquirer as a debt due to the Government.
• Where the disposer’s incorrect return causes the acquirer to under-remit, a 10% imposition arises under s.14(5).

Common mistakes

• Using the citizen ladder for a company. The 0% sixth-year rate is Part I only. Companies pay 10% forever.
• Assuming non-citizens get the year-four taper. They do not — Part III is 30% flat for five years.
• Deducting loan interest. Expressly not allowable, however commercially real the cost.
• Claiming Schedule 4 for a company. The RM10,000 or 10% exemption is restricted to individuals.
• Putting acquisition costs on the disposal side. The arithmetic survives; an audit of the computation does not.
• Forgetting that the buyer’s 3% is a credit. It is remitted against your liability and refunded if it overshoots.
• Timing a sale without checking the anniversary. Selling on 10 March rather than 20 June 2026 in the example above would have been a fifth-year disposal at 15%, not 10% — an extra RM16,100.

What’s next

Fix the acquisition date and the disposer class before you model anything else; they set the rate, and everything else only sizes the base. Then assemble the evidence for every adjustment — invoices for the enhancement works, the insurer’s settlement letter, the acquisition stamp certificate — because each one has to survive scrutiny individually.

If the disposal qualifies for an exemption rather than a rate, the filing route changes: a claim goes on CKHT 3 rather than through the ordinary assessment, and the acquirer’s retention duty interacts with it.