What is Real Property Gains Tax (RPGT)?

RPGT is a restricted capital gains tax charged on the disposal of real properties and shares in real property companies (RPC) in Malaysia. It is governed under the Real Property Gains Tax Act 1976 (RPGT Act) effective from 7 November 1975.

Before the RPGT Act was introduced, gains on disposal of real properties were taxed under the Land Speculation Tax Act 1974.



When would the RPGT provisions be triggered?

Generally, disposals of real properties and shares in RPCs would fall within the ambit of the RPGT Act unless they relate to trade transactions.

The decision tree below can be used in determining whether RPGT would be applicable.



RPGT and Income Tax are mutually exclusive. Disposals of real properties and RPC shares would generally be subject to RPGT. It is only where such disposals are part of the taxpayer’s trading transactions, would the transaction fall within the ambit of Income Tax.

As a rule of thumb, Income Tax would normally take precedence over RPGT.



http://iss2.etax.com.my/vld/rpgtvld.nsf/25...b7?OpenDocument

I'll let you guys discuss a bit before I give my opinion.

so you are saying that there is a chance to pay less in terms of tax to the gov ? my guess is it might be possible, but then, your personal income and property value should be quite low in order to get some gains here.

For most people, it's better to pay RPGT than Income Tax..
simple logic...one need to have a certain amount of income to acquire the property, ie income tax bracket is on the higher end.

RPGT is at 5%.
Income tax is from 0% to 27%.

Now, what are the requirements for paying 0% tax on a RM100k profit from the sale of a property?

Jason, good stuff. At least now we know there's one more loophole to this RPGT clause. But think like ??!! said, paying RPGT will be cheaper for most investors.

Btw, RPGT is taxed based on profit made, anyone knows the diff if you declare it as income?

Jason..we dont want Qs..

We want Answers

Any disposal gain from asset, is part of capital gain, not income.

Capital gain is tax exempted in Malaysia, except RPGT being introduced back.

You don't want any gain to be classified as income at all.

i bet he dun know one... try to solicit ideas from others

I rather pay 5% as my income group is already at 27%.

Hehe.

So far Pai understand what I meant.
If I tell the answer now you guys surely won't think hard enough.
It's similar to tax code 1031.
Ok, next answer.

What are the requirements for paying 0% tax on a RM100k profit from the sale of a property?
To pay zero tax, you have to spend all the RM100k away. In the end it shows no profit and no loss.


Next question.
Who is eligible to spend all the money away and not being tax?

Aisehman!!..This is a no brainer.
Aku nak complain lah.... use of misleading word....if deduct all expenses from difference in sell and buy price , then there is NO profit

Is the expert hiding some real clever manoeuvre?

ok, 4 years back i bought a DS link @ 192k, planing to sell it by next year @ 250k .
market price around 240k now.

my gain = 250-192=58k

my expenses = LA legal fees 3k
MOT 4.5k
bank interest +- 25k
reno/ upgrade the house 40k

total expenses = 72.5k

My Actual Profit = 58k-72.5k=-14.5k

so, am i require to pay tax on sale of my property

Sorry for my shallow understanding of the property market...but i wish to participate in this discussion...

I think the owner is eligible to spend all the money away...but how??

I thought that the RPGT is based on per transaction basis instead of the total profit ?
Does that means that declaring it as an Income and Spend it away will skip the tax ?

If u declare it as income...then u are subject to income tax....right? if it is declared as income, then u wil be tax even before u spend it...

I think the only way is to spend it as a cost on your property, but i'm not sure how lah...so awating all the dai kor here to give some guidance loh...

If follow yr calculation, u no need to pay tax. but bank interest is not deductible in the RPGT calculation anymore.

My solutions to RPGT waiver ; maybe bit dirty.....
1) Get bills to offset your profit. Bills like renovation, furniture, agent commission, or to create bills. (You know what I mean)
2) Undercounter. Declare lesser price in your new S&P, balance settled in cash. So you don't "seems" to be making so much.
3) Declare higher in your S&P if you buy a property now, for future benefit when you sell. (But you need to pay higher stamping duty)

These 3 methods shall be enough to offset most of your profit.

Morning guys.

Q:Who is eligible to spend all the money away and not being tax?
A:A business owner can spend the money earn before tax. An individual with less than 4 property will be tax first.


1.1 the treatment of rent as a non-business source of income under section 4(d) of
the Income Tax Act 1967 (the Act);
1.2 the situations or circumstances where rent or income from the letting of
property can be treated as business income of a person under section 4(a) of
the Act; and
1.3 how all properties of a person are to be grouped in several categories in
computing the statutory income under section 4(d) of the Act.

"Person" includes a company, a co-operative society, a partnership, a club, an
association, a Hindu joint family, a trust, an estate under administration and an
individual, but excludes a unit trust.

Generally, rent is regarded as a non-business source of income and is charged to
income tax under section 4(d) of the Act. Where the property concerned is managed
and let in such a systematic or organized manner that the letting can be regarded as
carrying on a business, the income from the letting can be charged to tax under
section 4(a) of the Act.

The letting of 4 or more commercial units, 4 or more floors of shophouses or 4
or more residential properties or any combination of 4 units of the above may
be treated as a business source of a company and the income therefrom
charged to tax under section 4(a). [The entire property (except for a
shophouse) constituted under the particular title should be included in the
letting].

http://www.hasil.gov.my/lhdnv3e/documents/...ling(1)2004.pdf


Q:What expenses are legitimate?

professional fees .... lawyer fees, maintenance fees, any expenses to the property eg plumbing-pipe leaking, painting, windows leaking, renovation work??????????

Jason, before you even get to "permitted expenses", can you let us know if the company you're referring to whether it is an "investment holding company" or not. And if not, how do you make your company not be classified under "investment holding company"? Are you running a separate business in the same company? And more than 20% of the company's revenue is derived from this business activity?