The real property gains tax (RPGT) is still part of the Malaysian property market landscape, but Putrajaya has heeded public opinion and making enhancements by revising the base year of calculation.
Under Budget 2020, the RPGT rate is maintained at 5% (10% for companies and foreign owners) if the property is sold after the fifth year, however, the valuation base year has been adjusted to the year 2013, from the year 2000.
The majority of the analysts lauded this move and viewed it as a positive measure for the secondary market, especially to owners who have owned property over two decades.
RPGT is a capital gains tax chargeable upon profit made from the sale of the property or land, where the resale price is higher than the purchase price.
Here is a simple calculation on the RPGT under Budget 2020:
For a property owner who sold a semidee at a price tag of RM2 million in 2019, the RPGT will be calculated based on the property valuation in the year 2000 (RM800,000). Hence, the property owner will need to pay RM60,000 to the government after the sale is concluded.
To simplify the calculation, incidental costs such as stamp duty, legal and agency fees are excluded.
Under Budget 2020, as the base year is revised to the year 2013, for the same property being sold at the same price next year, the RPGT calculation will now be based on the property valuation in the year 2013 (RM1.55 million).
If the owner sells the property next year, he/she will need to pay RM22,500 to the government. Compared with the previous budget, this seller saves RM37,500 on RPGT.
However, for the property owners who purchased the property after 2013, the RPGT calculation will be based on the valuation price during the purchase year.