What is Real Property Gains Tax (RPGT)? Definition, Latest Rates, How to Calculate

Selling property in Malaysia can lead to significant profits, but it also comes with tax responsibilities. One of the key taxes you must be aware of is the Real Property Gains Tax (RPGT), which applies to both individuals and companies. We will share with you how it works to make you plan better, stay compliant, and avoid costly penalties.

What is RPGT?

Real Property Gains Tax (RPGT) or Cukai Keuntungan Harga Tanah (CKTH) is a tax charged on the profit made from selling real estate or shares in real property companies in Malaysia. It is governed under the Real Property Gains Tax Act 1976 and enforced by the Inland Revenue Board (LHDN).

The tax applies to:

Malaysian citizens and permanent residents
Companies registered in Malaysia
Foreigners and non-residents

Profits subject to RPGT include sales of residential, commercial, and agricultural properties, as well as vacant land.

Latest RPGT Rates (as per LHDN)

The rate of RPGT depends on how long you have owned the property and whether you are an individual, company, or foreign owner. The longer you hold the property, the lower the tax rate becomes.

Holding Period	Malaysian Citizens & PR (Individuals)	Companies (Malaysian/Foreign)	Foreign Individuals
0 – 3 years	30%	30%	30%
4th year	20%	20%	30%
5th year	15%	15%	30%
6th year and beyond	0%	10%	10%

What Is Considered a “Gain”?

RPGT is charged on the net profit made from the sale of property, which is calculated as:

Selling Price – Purchase Price – Allowable Expenses

Allowable expenses include:

Renovation costs that increase property value
Legal fees and disbursements during purchase and sale
Stamp duty paid when acquiring the property
Commission paid to real estate agents

You must keep proper receipts and documentation to support these deductions during RPGT filing.

RPGT Exemptions

There are several exemptions that can reduce or eliminate your RPGT liability:

One-time exemption for Malaysian citizens on the gain from selling a private residence.
Family transfers between spouses, parents and children, or grandparents and grandchildren are fully exempt. (Transfers between siblings do not qualify.)
Partial exemption where RM10,000 or 10% of the chargeable gain (whichever is higher) is exempt from tax.
Temporary exemptions were previously introduced for specific periods (e.g., 2020–2021 residential property sales), but these are no longer ongoing.

How to Calculate RPGT

To find out how much Real Property Gains Tax (RPGT) you need to pay, calculate the net gain from the sale and apply the correct tax rate based on your holding period. The formula is:

RPGT = (Disposal Price – Acquisition Price – Allowable Expenses) × RPGT Rate

For example, if you sell a property for RM800,000 that you bought for RM600,000 and spent RM20,000 on renovations:

Gain = RM800,000 – RM600,000 – RM20,000 = RM180,000
RPGT Rate (4th year for individuals) = 20%
Tax payable = RM180,000 × 20% = RM36,000

When filing, you must use the CKHT forms provided by LHDN:

CKHT 1A (for seller) to declare the disposal
CKHT 3 (for exemptions, such as the one-time private residence exemption)
Other related forms if applicable (e.g., CKHT 2A for buyers)

These forms must be submitted within 60 days of the property transaction. Payments can also be made directly to LHDN, either online or at their branches.

RPGT Self-Assessment System

Starting 1 January 2025, RPGT in Malaysia will be managed under a self-assessment system. Under this approach, sellers are fully responsible for calculating and reporting their own RPGT without waiting for an assessment notice from LHDN.

Sellers must determine the chargeable gain, apply any exemptions they are eligible for (such as the one-time private residence exemption), and submit the correct CKHT forms to LHDN.

Accurate filing is also crucial. Mistakes in reporting can lead to penalties. Familiarity with the different CKHT forms (CKHT 1A, CKHT 3, and others) is important to avoid errors and meet compliance requirements.

Using Software to Simplify RPGT Reporting

Many property sellers and companies now use accounting software like SQL Account or cloud-based tax tools to:

Track acquisition costs and ownership period
Record allowable expenses with digital receipts
Calculate gains and RPGT liability automatically
Generate CKHT forms for submission

So, you can reduce potential errors and speeds up reporting, especially for businesses with multiple property transactions.

Common Mistakes

Mistakes in RPGT filing can lead to penalties or overpayment. Frequent errors include:

Misreporting the purchase or disposal dates, affecting tax rates
Forgetting to apply for exemptions (e.g., private residence exemption)
Submitting CKHT forms late (deadline is 60 days from sale date)
Failing to keep receipts for allowable deductions

FAQs

Who is exempted from RPGT in Malaysia?

Malaysian citizens selling a private residence (once in a lifetime) or transferring property within the family (spouse, parents, children) are exempt.

How do I claim RPGT exemption for my private residence?

Submit the exemption form (CKHT 3) when filing your RPGT documents with LHDN.

Can I use accounting software to handle RPGT filing?

Yes, many tools are designed to calculate RPGT automatically and prepare forms for submission.

What happens if I don’t pay RPGT on time?

Late payment can result in penalties of up to 10% and potential legal action by LHDN.

Is RPGT applicable to gifted or inherited properties?

Inherited properties are subject to RPGT upon sale, with the holding period starting from the date of inheritance.

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