The Malaysian government has limited all propety gains taxes to 10% and in addition has rescinded the need for overseas buyers to obtain Foreign Investment Committee consent before buying. State consent is no longer required in some areas (such as East Malaysia) and the whole property purchase procedure has been dramatically speeded up.

RPGT - Real Property Gains Tax was re-imposed with effective from 1 Jan 2010 at a rate of 5%. But in the Budget 2011, Real Property Gains Tax has been increased for the first two years to 10 per cent each year from the 5 per cent previously. The tax increase is to help curb speculation in the real estate market. However, the tax regime of 5 per cent will be imposed on the third, fourth and fifth year of disposal of an asset, so that genuine buyers are not discouraged from purchasing. There will be no tax on property disposed after the fifth year.

Example to illustrate the calculation of RPGT payable

Ms.Lee purchased a property on year 2006 at RM100,000 and sold after or on 1st JAN 2010 at RM200,000 (within five years of the date of purchase). She made RM100,000 from the transaction and the gains are subject to 5% RPGT and the calculation will be:

RM100,000 (Property Gains) – RM10,000 (Waived Exemption) = RM90,000 (Taxable Gains)

RM90,000 (Taxable Gains) x 5% (RPGT Rate) = RM4,500 (RPGT Chargeable)

Thus, the RPGT chargeable to Ms.Lee will be RM4,500.

Allowable Loss

Allowable loss means a loss made after the disposal. Tax relief shall be allowed in respect of the following accrued:

1.If the disposal price is less than the acquisition price.
2.If the disposal price is equal to the acquisition price

Exemption (under The Real Property Gains Tax (Exemption) Order 2009)

The flat 5% RPGT for the 1st five years will be implemented through the Real Property Gains Tax (Exemption) Order 2009. This Order has gazetted and take effective since 1st JAN 2010. Therefore, the existing rate of RPGT, which is within 30% to 5% as in Schedule 5 of the Real Property Gains Tax 1976, will no longer be applicable.