How to Calculate Real Property Gains Tax (RPGT) In Malaysia?

“Are you planning to sell your property in Malaysia and wondering how much tax you’ll need to pay? Real Property Gains Tax (RPGT) can be a confusing concept for many, but don’t worry – we’ve got you covered! In this post, we’ll take a deep dive into RPGT and provide you with an easy-to-follow guide on how to calculate it. 

How to calculate RPGT?

If you are an individual taxpayer who owns property in Malaysia, you may be required to pay RPGT. The following steps will show you how to calculate your RPGT liability in Malaysia.

1. Calculate the market value of your property at the relevant tax year
2. Multiply this market value by the applicable tax rate
3. Subtract any reliefs or deductions from this figure
4. Deduct any capital gains realized on the sale of the property during the relevant tax year
5. If any remaining balance is more than zero, then you are liable for RPGT on that amount

Example: Calculating the Gain on the Sale of a Property

When you sell a property, you may be required to pay Real Property Gains Tax (RPGT). RPGT is a tax that applies to the gain on the sale of a property. To calculate your RPGT liability, you need to know the following:

• The price of the property before it was sold
• The price of the property after it was sold
• The amount of time that has elapsed since the sale took place

To find out your RPGT liability, take the following steps:

1. Calculate the original purchase price of the property.
2. Calculate how much more than this original purchase price was paid for the property after it was sold. This is your gain on the sale.
3. Divide this amount by 106 to determine how much RPGT you must pay.

 

What are Allowable Losses?

The provisions of the Income Tax Act 1967 determine the allowable  in respect of real property. The calculation of allowable losses is based on an estimate of the market value at the end of the year, reduced by 50% if it is less than RM500,000.

If you have incurred any loss on your rental property during the taxation year, you can deduct this loss from your income as an allowable loss. Similarly, if you have sold or disposed of your property during the taxation year for a gain lower than its original cost, you can claim a deduction on your return.

Conclusion

If you are a taxpayer in Malaysia, you are familiar with the concept of RPGT. As the name suggests, this tax is imposed on real property gains (i.e., the increase in the value of your residence or any other “real” estate). This article provides a step-by-step guide on calculating RPGT if you make any such gain in 2018. We hope this information will be helpful and that it does not cause too much inconvenience for you during tax season!