Real Property Gains Tax (hereinafter known as “RPGT”) is a tax imposed on the profits gained from the disposal of taxable assets such as, but not limited to shares, houses, commercial buildings, farms, and vacant land and is governed under Real Property Gains Tax Act 1976 (hereinafter known as “RPGT Act 1976”.
Tax Rates
As of 2025, the RPGT that disposers of land must pay depends on the category that they fall in and the asset holding period to be disposed of. A summary of this is reproduced as below:
Deductible Expenses
Where land disposition is concerned, there are various circumstances where one is entitled to a taxable amount deduction in the disposal value or cost. The circumstances are as below:
a) If the condition of the asset has been reflected by the expenses at the time of disposal, i.e. a renovated extension of the house;
b) If there are expenses incurred to maintain or increase the asset value such as renovation or first-time installation;
c) If there are legal fees, disbursements surveyor fees, and other agents’ fees relevant to the disposal of the property which can be deductible from the taxable amount;
d) If there were any costs or fees incurred by the disposer during the acquisition of the land in question.
However, for both (c) and (d), note that fees accrued from the non-compliance of the sale agreement or late delivery cannot be deductible through this avenue.
As shown in the table below, unless there are any restrictions in sub-legislation, the following exceptions apply:
Exceptions for Expenses Incurred
There are many expenses incurred that cannot be counted towards the disposal or acquisition value. For example:-
a) Expenses incurred before 1st January 1970, 1st January 2000, or 1st January 2013 for disposers who fall under Part I of Schedule 5 RPGT Act 1976 as the property now reflects the market value;
b) Expenses incurred before 1st January 1970 for disposals under Parts II and III of Schedule 5 RPGT Act 1976 as they have been replaced by the market value of the asset on 1st January 1970;
c) Expenses towards repair costs, maintenance costs, replacement costs, assessment tax, utility payments, input tax, and output tax;
d) From 1st January 2010, interest incurred on the loan for the acquisition of the asset; and
e) Fees incurred through the submission of the RPGT Forms.
The Self-Assessment System
Lembaga Hasil Dalam Negeri (hereinafter known as “LHDN”) introduced that from 1st January 2025 onwards, all RPGT submissions must be completed through the MyTax portal online. This is mandatory and includes disposals made in the previous year. Failure to make a proper declaration or payment for RPGT may result in an imposition of penalties or civil legal action.
Further, a Self-Assessment Tax System has also been introduced for disposers or acquirers to submit documents for tax deductions. Disposers or acquirers can conduct their self-assessment by:
a) Submitting their RPGT Return Forms (CKHT 1A/1B/2A/3) within 60 days from the date of disposal;
b) Determine the tax deductions/ profits and calculate the tax imposed in the RPGT Return Forms and submit their relevant supporting documents to LHDN for review;
c) The acquirer is to make the relevant payments under Section 21B of RPGT Act 1976 within 60 days of the acquisition date and the disposer is to make the payment of any remaining tax within 90 days of the disposal date;
d) The documents containing information on the calculation of tax deductions profits such as receipts, invoices, etc, must be retained for a period of 7 years from the end of assessment year for review if requested by LHDN;
e) Further, if the RPGT Return Forms have been submitted past the deadline as above, the 7-year timeframe will commence from the end of the assessment year that the forms had been submitted on; and
f) No further notices will be issued as the RPGT Return Forms submitted is sufficient as an assessment notice for the disposal.
About the authors
Tee Wei Lyn
Associate
Real Estate
Halim Hong & Quek
wltee@hhq.com.my
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Gooi Sha-Lene
Pupil-in-Chambers
Real Estate
Halim Hong & Quek
shalene@hhq.com.my
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