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> How much RPGT will be imposed for this situation?

activexxx
post Jan 16 2019, 04:08 PM, updated 2w ago

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A bought a piece of property in year 2000 at a value of RM90,000.

Before A passed away, A transfer the property to B in year 2015. Let's assume the property value became RM190,000.

Disposal gain is RM100,000.

B decides to sell the property in year 2017. Will the tax percentage falls in 30% or 5%?


https://loanstreet.com.my/learning-centre/rpgt-in-malaysia


mini orchard
post Jan 16 2019, 05:14 PM

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forever1979
post Jan 17 2019, 06:11 PM

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for B, year of acquisition should be 2015, year of disposal is 2017.
Yggdrasil
post Feb 10 2019, 08:39 PM

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It depends on whether A and B are related.

In 2015, if the transfer of the property is between spouses, parents, child, grandparent or grandchild then disposal price = acquisition price. So it's gain of RM100,000 taxed at 5%.

Otherwise, it's the gain (from purchase price in 2015) taxed at 30%.
edyek
post Feb 11 2019, 09:01 PM

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QUOTE(Yggdrasil @ Feb 10 2019, 08:39 PM)
It depends on whether A and B are related.

In 2015, if the transfer of the property is between spouses, parents, child, grandparent or grandchild then disposal price = acquisition price. So it's gain of RM100,000 taxed at 5%.


Otherwise, it's the gain (from purchase price in 2015) taxed at 30%.
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Hi there, why only 5%? As long as there is transfer involved, all acquisition date resets to the current transfer date, no?
Yggdrasil
post Feb 11 2019, 10:52 PM

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QUOTE(edyek @ Feb 11 2019, 09:01 PM)
Hi there, why only 5%? As long as there is transfer involved, all acquisition date resets to the current transfer date, no?
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I'm not a tax expert but when my family members disposed property inherited by parents, it's taxed at the lowest rate rather than the 30%.

I would say that for this case it's special because it's deemed as remains within the same person. Just like children dispose property given by parents rather than parents dispose it themselves.
activexxx
post Feb 12 2019, 04:51 PM

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QUOTE(Yggdrasil @ Feb 11 2019, 10:52 PM)
I'm not a tax expert but when my family members disposed property inherited by parents, it's taxed at the lowest rate rather than the 30%.

I would say that for this case it's special because it's deemed as remains within the same person. Just like children dispose property given by parents rather than parents dispose it themselves.
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thanks for your sharing.
edyek
post Feb 12 2019, 05:50 PM

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QUOTE(Yggdrasil @ Feb 11 2019, 10:52 PM)
I'm not a tax expert but when my family members disposed property inherited by parents, it's taxed at the lowest rate rather than the 30%.

I would say that for this case it's special because it's deemed as remains within the same person. Just like children dispose property given by parents rather than parents dispose it themselves.
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Are you sure your family members (childen) dispose the property inherited (already transferred property from parents to children name) within 3 years and less than 30% in recent years? (After the amendment of RPGT of 30% in the first 3 years.)

Parents buy 2013. Sell 2019. More than 5 years. Tax at 5%.
Sell at 2017 @ 4th year. Tax at 20%.

Parents buy 2013. Transfer to children 2017. Children sell 2019. Less than 3 years. Tax at 30%.

This post has been edited by edyek: Feb 12 2019, 05:57 PM
Yggdrasil
post Feb 12 2019, 08:43 PM

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QUOTE(edyek @ Feb 12 2019, 05:50 PM)
Are you sure your family members (childen) dispose the property inherited (already transferred property from parents to children name) within 3 years and less than 30% in recent years? (After the amendment of RPGT of 30% in the first 3 years.)
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It was a residential property owned by their parents from super long time ago (1950s). It's so old that the land title was not recognised and needed another 3 months or so to get the new one (after engaging professional lawyers/connections from buyer's side). Otherwise, it would have been longer.

And yes it was passed to the children (seller) in 2017 through their will. The children sold it in 2018 before the new RPGT taxed was imposed at 5% for 5 years and beyond. Previously was 0%. They sold for 0% RPGT without the special exemption.

QUOTE(edyek @ Feb 12 2019, 05:50 PM)
Parents buy 2013. Sell 2019. More than 5 years. Tax at 5%.
Sell at 2017 @ 4th year. Tax at 20%.
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Looks right.

QUOTE(edyek @ Feb 12 2019, 05:50 PM)
Parents buy 2013. Transfer to children 2017. Children sell 2019. Less than 3 years. Tax at 30%.
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No. It should be sold at 5 years and beyond and taxed at 5% (new RPGT).
Please consult a tax expert or LHDN to make sure as it could be on a case by case basis.

I'm positive that I am correct because a transfer has no intention for sale/business. One of the main reasons RPGT was introduced was to prevent property prices from increasing like mad because people think it's profitable to buy and sell.

Furthermore, there is no acquisition price (e.g. market value) for transfer between family members on the date of transfer. No cash is exchanged.

This post has been edited by Yggdrasil: Feb 12 2019, 08:53 PM
edyek
post Feb 12 2019, 11:02 PM

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QUOTE(Yggdrasil @ Feb 12 2019, 08:43 PM)
It was a residential property owned by their parents from super long time ago (1950s). It's so old that the land title was not recognised and needed another 3 months or so to get the new one (after engaging professional lawyers/connections from buyer's side). Otherwise, it would have been longer.

And yes it was passed to the children (seller) in 2017 through their will. The children sold it in 2018 before the new RPGT taxed was imposed at 5% for 5 years and beyond. Previously was 0%. They sold for 0% RPGT without the special exemption.
Looks right.
No. It should be sold at 5 years and beyond and taxed at 5% (new RPGT).
Please consult a tax expert or LHDN to make sure as it could be on a case by case basis.

I'm positive that I am correct because a transfer has no intention for sale/business. One of the main reasons RPGT was introduced was to prevent property prices from increasing like mad because people think it's profitable to buy and sell.

Furthermore, there is no acquisition price (e.g. market value) for transfer between family members on the date of transfer. No cash is exchanged.
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Do correct me if im wrong. If there are gains and are RPGT taxable, the rate will apply accordingly. 30% or 20% and so on. The only thing at play here is whether there is actual transfer of names between parents and children then subsequently sell to third party for a gain. If there is actual transfer of names from parents to children to third party and there is gain, then it is RPGT taxable.

If Parents transfer the property to children at Year 2017 (no cash exchange), LHDN will still value the property (that is where your stamp duty value actually comes from) and this forms the basis of the acquisition price for the property by the children.

E.g. 1
Parents buy 2013 at RM100k. Transfer to children 2017 (LHDN value at Rm 200k). Children sell 2018 at RM RM 250k. Less than 3 years @ 30% tax.

Children Acquisition price is RM 200k and acquisition date is 2017.

Sell RM 250k = RM 50k gain. Tax at 30% = RM 15k RPGT payable.

E.g. 2
Parents buy 2013 at RM100k. Transfer to children 2017 (LHDN value at Rm 200k). Children sell 2018 at RM RM 200k (no gain no loss). Less than 3 years @ 30% tax. No gain, nothing to tax at 30%.

Children Acquisition price is RM 200k and acquisition date is 2017

Sell RM 200k = RM 0 gain. RM 0 gain. Tax at 30% = RM 0 RPGT.


FOR TS case and based on your previous comments
QUOTE(Yggdrasil @ Feb 10 2019, 08:39 PM)
It depends on whether A and B are related.

In 2015, if the transfer of the property is between spouses, parents, child, grandparent or grandchild then disposal price = acquisition price. So it's gain of RM100,000 taxed at 5%.

Otherwise, it's the gain (from purchase price in 2015) taxed at 30%.
*
disposal price = acquisition price <<< is not same with disposal date = acquisition date.

Parents passed to children on Year 2015 (deemed disposal date for parents 2015 and as acquisition date for children 2015. Parents disposal price = children acquisition price, and acquisition price is valued by LHDN), and children sold to third party on Year 2017(deemed as disposal date 2017, and disposal price is as states in SPA between children and new buyer).

For a gain of RM 100k with only 5% RPGT tax in under 3 years time is impossible.

Like I've mentioned earlier, as long as there is transfer of name, the RPGT time frame resets to Year 0.


Anyhow, I stand corrected. Cheers. Good discussion.

This post has been edited by edyek: Feb 12 2019, 11:13 PM
Yggdrasil
post Feb 12 2019, 11:34 PM

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QUOTE(edyek @ Feb 12 2019, 11:02 PM)
disposal price = acquisition price  <<<  is not same with disposal date = acquisition date.

Parents passed to children on Year 2015 (deemed disposal date for parents 2015 and as acquisition date for children 2015. Parents disposal price = children acquisition price, and acquisition price is valued by LHDN), and children sold to third party on Year 2017(deemed as disposal date 2017, and disposal price is as states in SPA between children and new buyer).

For a gain of RM 100k with only 5% RPGT tax in under 3 years time is impossible.

Like I've mentioned earlier, as long as there is transfer of name, the RPGT time frame resets to Year 0.
Anyhow, I stand corrected. Cheers. Good discussion.
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I think you are right.

But it doesn't make sense since the parent who acquired a property at let's say RM450,000 in 2014 and the market value in 2015 is RM500,000. Then, the parent wishes to sell the property and avoid RPGT may just transfer to the children. Since the market value is RM500,000 in 2015, the disposal price and acquisition price is RM500,000.

Thus, the parent disposed at RM500,000 and the children acquired at RM500,000. The children then sells the property in 2015 for RM500,000. The RPGT is then (RM500,000 - RM500,000) x 30% = RM0 compared to (RM500,000-RM450,000) x 30% = RM15,000. rclxub.gif
edyek
post Feb 12 2019, 11:37 PM

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Ok, Yggdrasil ,I think activexxx gave the wrong facts. And that why you and I are chicken and duck here.

QUOTE
“Before A passed away, A transfer the property to B in year 2015. Let's assume the property value became RM190,000.”
B acquisition price is Rm190,000 and acquisition date is 2015. There are no disposal gain of 100k if A and B is family members.

If A and B are not, then A (NOT B) has disposal gain of 100k but pays no RPGT since already hold for more than 5 years before transfering to B on 2015.

QUOTE
B decides to sell the property in year 2017. Will the tax percentage falls in 30% or 5%?
B wants to sell at 2017. Meaning the property is already under B name since 2015.

If B sell at 220k, then B has disposal gain of 30k and is 30% taxable.

B does not have 100k disposal gain. Unless sell 290k at 2017.

This post has been edited by edyek: Feb 12 2019, 11:38 PM
edyek
post Feb 12 2019, 11:40 PM

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QUOTE(Yggdrasil @ Feb 12 2019, 11:34 PM)
I think you are right.

But it doesn't make sense since the parent who acquired a property at let's say RM450,000 in 2014 and the market value in 2015 is RM500,000. Then, the parent wishes to sell the property and avoid RPGT may just transfer to the children. Since the market value is RM500,000 in 2015, the disposal price and acquisition price is RM500,000.

Thus, the parent disposed at RM500,000 and the children acquired at RM500,000. The children then sells the property in 2015 for RM500,000. The RPGT is then (RM500,000 - RM500,000) x 30% = RM0 compared to (RM500,000-RM450,000) x 30% = RM15,000.  rclxub.gif
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If within 5 years of transfer between parents and children, the cost of acquisition follow the parents acquisition price. Which is 450k.
Yggdrasil
post Feb 12 2019, 11:45 PM

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Oh my! Mindblown. Makes a lot of sense now. Thanks edyek for explaining. smile.gif

This post has been edited by Yggdrasil: Feb 12 2019, 11:46 PM
edyek
post Feb 12 2019, 11:58 PM

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QUOTE(Yggdrasil @ Feb 12 2019, 11:45 PM)
Oh my! Mindblown. Makes a lot of sense now. Thanks edyek for explaining. smile.gif
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Definition of market value:
If the Director General is of the opinion that the disposal market value of the property as agreed by the parties is incorrect, the market value in question shall be determined by the Director General. Cant run cant hide. Cheers. Great learning.
activexxx
post Feb 14 2019, 12:25 PM

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QUOTE(edyek @ Feb 12 2019, 11:37 PM)
Ok, Yggdrasil ,I think activexxx gave the wrong facts. And that why you and I are chicken and duck here.
B acquisition price is Rm190,000 and acquisition date is 2015. There are no disposal gain of 100k if A and B is family members.

If A and B are not, then A (NOT B) has disposal gain of 100k but pays no RPGT since already hold for more than 5 years before transfering to B on 2015.
B wants to sell at 2017. Meaning the property is already under B name since 2015.

If B sell at 220k, then B has disposal gain of 30k and is 30% taxable.

B does not have 100k disposal gain. Unless sell 290k at 2017.
*
Sorry guys. don't meant to give wrong facts. In fact, this is my first time dispose a porperty, which inherited.

Cheers.
edyek
post Feb 14 2019, 08:32 PM

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QUOTE(activexxx @ Feb 14 2019, 12:25 PM)
Sorry guys. don't meant to give wrong facts. In fact, this is my first time dispose a porperty, which inherited.

Cheers.
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No problem lah. Small issue only. biggrin.gif

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