Gains Tax

Capital Gains Tax or Real Property Gains Tax (RPGT) was introduced on 7th November 1975 as a tax on capital gains from the disposal of properties. Real Property Gains are gains derived from the disposal of chargeable real property situated in Malaysia.

Chargeable Real Property consists of lands situated in Malaysia and any interests, options and other rights in or over such lands.

Lands includes buildings and anything attached to the land, or permanently fixed to anything attached to the land, or permanently fixed to anything attached to the land, standing timber, trees, crops and other vegetation growing on the land. It also includes the land covered by water.

Dispose means sell, convey, transfer, assign, settle or alienate whether by agreement or force of law. Both the disposer and the acquirer of an asset must give notice to the Inland Revenue Department (IRD) within thirty days following the conclusion of an agreement for the disposal of the asset in the prescribed forms obtainable from the IRD, free of charge.

            A) Disposal Price     (the price you sold at)
Less      B) Acquisition Price (the price you initially paid for)
Less      C) Incidental Cost    (advertisement, agent's commission, legal fees,
                                            stamping fees, premiums, etc.)
             -----------------------
             D) Gains on Disposal
Less      E) Tax exemption (refer to below)
             -----------------------
             F) Chargeable gains
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TAX EXEMPTION is 10% on the gains as shown in (D) or RM5,000, whichever is greater. This exemption is only for the property in its whole with one individual taxpayer.

Mr. Wong bought a house for RM250,000 in 1995. 4 years and 3 months later, he sold it for RM380,000. Computation for his RPGT would be:

	Description	Value (RM)	Remarks
A	Disposal Price	380,000.00	The price he sold the house
B	Less Acquisition Price	250,000.00	The price he bought the house
C	Less Incidental Cost	8,100.00	Legal fees & Agency fees
	Gains on Disposal	121,900.00	The actual amount he profited
	Less Tax Exemption	12,190.00	10% of amount he profited
	Taxable Gains	109,710.00	The amount subjected to Gains Tax
D	Gains Tax	16,456.50	Based on the rate as below

YEAR OF DISPOSAL AFTER ACQUISITION	0-2 years	3 years	4 years	5 years	6 years or more
INDIVIDUAL	30%	20%	15%	5%	Nil
COMPANY	30%	20%	15%	5%	Nil