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In the Budget 2014, the government is proposing the RPGT be increased to 30% from the current 15% on all properties sold before three years from the date of purchase and whereas for disposals within the holding period up to 4 and 5 years, the rates are increased to 20% and 15%, respectively. For disposals made in the sixth and subsequent years, no RPGT is imposed on citizens, whereas companies are taxed at 5%.

In the Budget 2010, Government has re-imposed the Real Property Gains Tax (RPGT). Real Property Gains are gains derived from disposal, sell, convey, assign, transfer, settle or alienate whether by agreement or by force of law which fall under chargeable asset. All chargeable assets must be made during the year of assessment and all particulars must be furnished as requested.

Example to illustrate the calculation of RPGT payable (effective from 1 Jan 2013)

Ms Lee purchased a property on year 2010 at RM100,000 and sold on 1st JAN 2013 at RM200,000 (3 years from the date of purchase). She made RM100,000 from the transaction and the gains are subject to 10% RPGT and the calculation will be:

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

RM90,000 (Taxable Gains) x 10% (RPGT Rate) = RM9,000. (RPGT Chargeable)

Thus, the RPGT chargeable to Ms Lee will be RM9,000.

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

(under 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.

However, there are three circumstances where the property owner is exempted from the 5% RGPT.

* The level of exemption is increased from RM5,000 to RM10,000 or 10% of the chargeable gains, which ever is the higher

* Gifts between parent and child, husband and wife, grandparent and grandchild; and

* disposal of a residential property once in a lifetime.



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