RPGT Guide Malaysia

Real Property Gains Tax (RPGT) is a tax on the chargeable gain you make when you dispose of real property in Malaysia, or when you dispose of shares in a Real Property Company (RPC). It is charged on the profit, not the sale price.

RPGT is governed by the Real Property Gains Tax Act 1976 (RPGTA 1976) and is administered by Lembaga Hasil Dalam Negeri (LHDN, the Inland Revenue Board). This is the same authority that runs income tax, but RPGT is a separate charge with its own return forms and its own rules.

What counts as a disposal:

• Selling a house, condo, shophouse, land or any other real property.
• Transferring or gifting property (with specific family exceptions covered below).
• Selling shares in a Real Property Company, a company whose assets are mostly real property.

What RPGT is not:

• It is not income tax. A one-off property gain by an individual is taxed under RPGT, not under the income tax rules.
• It is not the Capital Gains Tax introduced in 2024. That CGT covers gains on unlisted shares and certain foreign assets by companies. RPGT stays on real property and RPC shares. The two are separate charges, explained further down.

The amount you pay depends on three things: who you are (citizen/PR, company, or foreigner), how long you held the property, and how large the gain is after allowable deductions and exemptions.

RPGT rates are set out in Schedule 5 of the Act and depend on the disposer category and the holding period (how many years you owned the property before disposing of it). The figures below are current as of July 2026. Budget 2026 made no change to RPGT rates, and the structure has been stable since 1 January 2022.

Schedule 5 splits disposers into three parts:

• Part I: individual Malaysian citizens and permanent residents.
• Part II: companies incorporated in Malaysia, trustees, trusts, or bodies of persons.
• Part III: non-citizens and non-PRs, foreign companies, and executors of estates of deceased non-citizens/non-PRs.

RPGT rate table (as of July 2026):

Points that trip people up:

• A citizen or PR pays 0% once they hold for six years or more. This is the single biggest lever an individual seller has.
• A company never reaches 0%. Its floor is 10% from Year 6.
• A foreigner pays a flat 30% for the first five years and drops to 10% only from Year 6. The lowest rate a foreigner ever pays is 10%, no matter how long the property is held.

Where the 0% and 10% floor came from: the 0% rate for citizens/PRs on Year-6-and-beyond disposals (and the 10% floor for companies and foreigners) took effect on 1 January 2022 under the Finance Act 2021. That change removed the 5% rate that used to apply to disposals after five years.

The holding period decides your rate, so getting the dates right matters.

Acquisition date to disposal date. The holding period runs from the date you acquired the property to the date you dispose of it, as defined in the Act.

The date of disposal is usually the SPA date. For holding-period purposes, the date of disposal is generally the date of the sale and purchase agreement (SPA), not the completion date or the date the final payment clears. This can move you from one rate band to another, so watch the SPA date closely if you are near a year boundary.

Worked example of the band effect. Suppose a citizen bought in March 2020 and signs an SPA to sell:

• SPA in February 2023: that falls within Year 3, so the rate is 30%.
• SPA in April 2026: that falls in Year 6, so the rate is 0%.

The gap between those two outcomes is the entire tax bill. Holding one more cycle to cross into Year 6 can take a citizen or PR from 30% to nothing.

RPGT is charged on the chargeable gain, worked out in a fixed order.

Step 1: Chargeable gain = disposal price minus acquisition price.

Start with what you sold for, minus what you paid for it.

Step 2: Deduct allowable and incidental costs.

You can deduct costs of buying, holding and selling, including:

• Legal fees
• Real estate agent commission
• Valuation fees
• Advertising costs
• Enhancement costs (renovations and improvements that add value)

These reduce the gain before tax.

Step 3: Apply the individual exemption.

Every individual (a natural person) gets a Schedule 4 exemption of the greater of RM10,000 or 10% of the chargeable gain on each disposal. For part disposals, a proportionate amount applies.

Step 4: Apply the rate for your category and holding year.

Multiply the remaining chargeable gain by the Schedule 5 rate that matches your disposer category and holding period.

A simple walkthrough (citizen, sold in Year 4):

• Disposal price: RM650,000
• Acquisition price: RM500,000
• Gross gain: RM150,000
• Less legal fees, agent commission, valuation, renovations (say RM30,000): chargeable gain = RM120,000
• Less exemption (greater of RM10,000 or 10% of RM120,000 = RM12,000): RM108,000
• Year 4 rate for a citizen is 20%: RPGT = RM21,600

Change only the holding year and the tax changes: at Year 6 the same citizen would pay 0%.

Allowable losses. If your acquisition price exceeds your disposal price, you make an allowable loss. That loss can be relieved against RPGT on later chargeable gains, reducing tax on a future profitable disposal.

Every individual who is a natural person is entitled to the Schedule 4 exemption on each disposal: the greater of RM10,000 or 10% of the chargeable gain.

How it works in practice:

• If your chargeable gain is small, say RM8,000, the RM10,000 floor covers it and there is effectively nothing left to tax.
• If your chargeable gain is large, say RM300,000, then 10% (RM30,000) is the bigger figure, so RM30,000 is exempt and RM270,000 is taxed at your rate.
• For part disposals (selling only a portion of the property), a proportionate amount of the exemption applies.

This exemption is separate from, and applies on top of, the deductions for legal fees, commission, valuation and renovations. It is applied after those costs and before the rate.

This relief is for individuals only. Companies do not get the RM10,000-or-10% exemption.

Beyond the RM10,000-or-10% relief, several full exemptions can wipe out RPGT entirely.

Once-in-a-lifetime private residence exemption (Section 8).

A Malaysian citizen or permanent resident may claim a once-in-a-lifetime full RPGT exemption on the disposal of one private residence. This exempts the entire chargeable gain, regardless of the amount or how long you held the property. You can only use it once in your lifetime, so most people save it for their largest gain. It is claimed via Form CKHT 3.

Gifts between close family (no-gain, no-loss).

Transfers of property as a gift between:

• spouses,
• parent and child, or
• grandparent and grandchild

are treated as no-gain, no-loss (under Section 3 Schedule 2 / Section 8), so no RPGT is triggered on such transfers, where the donor is a citizen or PR. This is how families pass property down without an RPGT charge on the transfer itself.

Low-cost and affordable housing.

Disposal of low-cost, low-medium-cost, and affordable housing is exempt from RPGT. The qualifying price threshold varies by state.

Each of these is a genuine exemption, meaning zero RPGT on that disposal, not just a rate reduction. Choose carefully which disposal you attach the once-in-a-lifetime exemption to.

Foreigners, non-citizens and non-PRs, and foreign companies fall under Part III of Schedule 5, and they are taxed more heavily than citizens.

The foreigner rate structure:

Key facts for foreign sellers:

• There is no tapering in the first five years. A foreigner pays a flat 30% whether they sell in Year 1 or Year 5.
• The rate drops to 10% only from Year 6, and that 10% is the floor. The lowest rate a foreigner ever pays is 10%, no matter how long the property is held.
• A foreigner does not get the citizen/PR 0% band.
• Executors of the estate of a deceased non-citizen/non-PR are also taxed under Part III.

Retention sum is higher too. When a foreigner sells, the buyer's solicitor must retain 7% of the consideration and remit it to LHDN (versus 3% for a citizen/PR seller). See the next section.

RPGT is collected partly through a retention (withholding) mechanism and partly through returns both parties must file.

The retention sum (held back by the buyer).

When property is sold, the acquirer (the buyer, via their solicitor) must retain and remit part of the price to LHDN:

• 3% of the consideration where the disposer is a citizen or PR.
• 7% of the consideration where the disposer is a non-citizen, non-PR or foreigner.
• For disposals by companies and societies (Part II), the retention sum was increased from 3% to 5% effective 1 January 2022.

The amount retained is the lower of the whole cash consideration or that percentage. This retention is an advance against the seller's final RPGT; any excess is refunded after assessment.

The CKHT return forms.

Both parties must file within 60 days of the date of disposal:

• Disposer (seller): files CKHT 1A for real property, or CKHT 1B for RPC shares.
• Acquirer (buyer): files CKHT 2A.
• Exemption or non-chargeable claims: use CKHT 3 (this is also the form for the once-in-a-lifetime private residence exemption).

Penalties for being late.

• If the acquirer does not remit the retention sum within 60 days, a 10% penalty applies to the outstanding amount.
• If the disposer is late paying the balance of tax, a 10% surcharge applies.

A 2026 procedural update. Effective 1 January 2026, the acquirer may remit as the retention sum the lower of the full cash consideration, the 3%/5%/7% percentage, or the disposer's deemed/self-assessed RPGT amount. Instalment payment of tax under a deemed assessment is also permitted, subject to DGIR approval. This can reduce the cash held back where the actual RPGT is clearly lower than the flat percentage.

A common point of confusion since 2024 is the difference between RPGT and the newer Capital Gains Tax (CGT).

The two are separate charges and are not interchangeable. If you sell a house or land, that is RPGT. If a company disposes of unlisted shares or certain foreign assets, that may fall under CGT. When in doubt about which applies, confirm with LHDN or a licensed tax agent, and see the general Tax Guide for how the pieces fit together.

RPGT is predictable, which makes planning worthwhile.

• Time the disposal against the holding-period bands. For a citizen or PR, crossing into Year 6 takes the rate to 0%. If you are close to a boundary, the SPA date is what counts.
• Keep every receipt. Legal fees, agent commission, valuation, advertising and renovation costs all reduce the chargeable gain. Without documents, you cannot deduct them.
• Decide where to spend the once-in-a-lifetime exemption. It wipes out the entire gain on one private residence. Most sellers save it for their biggest expected gain rather than using it early on a small one.
• Use family transfer rules deliberately. Gifts between spouses, parent and child, or grandparent and grandchild are no-gain, no-loss, so no RPGT is triggered on the transfer.
• Bank your allowable losses. A loss on one disposal can be relieved against RPGT on a later gain, so keep the paperwork even when you sell at a loss.
• Diarise the 60-day filing window. Both buyer and seller must file CKHT forms within 60 days. Late remittance or payment attracts a 10% penalty or surcharge.
• Do not confuse RPGT with CGT. Property gains are RPGT. Unlisted-share and certain foreign-asset gains by companies are CGT.

For the wider picture on buying, holding and selling property, see the Property Investment Guide and, for first-time buyers, the First Home Guide.