Highlights of Budget 2014 – Real Property Gains Tax - RPGT

Under the recent Budget 2014 announcement, the Malaysian Government has proposed a significant increase to the current RPGT rates to further curb speculative activities in the local real property market.

RPGT is a tax imposed on gains from disposal of all types of properties such as residential and commercial buildings, land and shares of real property companies. RPGT is imposed on the net gains from disposal of property after deducting the following costs:-

    Acquisition price

    Stamp duty

    Legal fees

    Renovation costs

    Commission for sales and administrative payments

For Malaysian citizens and permanent residents, RPGT is exempted for the disposal of one residential property once in their lifetime.

Further, RPGT is also not imposed on gains from disposal of property between:-

    Husband and wife

    Parents and children

    Grandparents and grandchildren

The current RPGT rates vary from 0% to 30%, depending on the holding period. The holding period refers to the period between the acquisition date and the disposal date of the property.

To further curb speculative activities, the RPGT rates on disposal of properties and shares in real property companies effective 1 January 2014 shall be as follows:-