RPGT Malaysia — Real Property Gains Tax Explained (2026)

Selling a property in Malaysia triggers a tax that most owners only think about when they are already sitting across from a buyer. Real Property Gains Tax (RPGT) can take a meaningful slice of your profit — 30% if you sell in the first two years — or nothing at all if you have held long enough and are a Malaysian citizen.

Understanding the rates, how to calculate your actual chargeable gain, and which exemptions apply to your situation is not optional for anyone planning a property sale. This guide covers the full picture before you move.

What Is RPGT and Who Administers It#

Real Property Gains Tax is a tax on the gain — the profit — from disposing of real property in Malaysia. It applies to the sale, transfer, or disposal of:

• Land (with or without buildings)
• Shares in a Real Property Company (RPC) — a company where 75%+ of its tangible assets are real property

RPGT does not apply to rental income (that is income tax), nor to the full sale price — only to the gain between what you paid and what you received.

The tax is administered by the Inland Revenue Board of Malaysia (LHDN — Lembaga Hasil Dalam Negeri). The current RPGT rate structure was established under the Finance Act 2021 and applies from 1 January 2022 onward. Previous amendments (notably in Budget 2019 which reinstated RPGT for year 6+ sales) were reversed for citizens and PRs under the 2021 Act.

RPGT applies to:

• Malaysian citizens and permanent residents (PRs)
• Foreign nationals (non-citizens, non-PRs)
• Companies, trusts, and other entities incorporated in Malaysia
• Foreign companies

The rates differ significantly between these categories.

Current RPGT Rates by Holding Period (2026)#

The holding period is measured from the acquisition date to the disposal date — both dates inclusive, using the SPA or instrument of transfer date, whichever is earlier.

| Holding Period | Malaysian Citizen / PR | Company (Incorporated in Malaysia) | Foreigner (Non-Citizen / Non-PR) | Foreign Company | |---|---|---|---|---| | Year 1 | 30% | 30% | 30% | 30% | | Year 2 | 30% | 30% | 30% | 30% | | Year 3 | 20% | 20% | 30% | 30% | | Year 4 | 15% | 15% | 30% | 30% | | Year 5 | 5% | 10% | 30% | 30% | | Year 6 and beyond | 0% | 10% | 10% | 10% |

Key differences to note:

• Citizens and PRs: The 0% rate in Year 6+ is the major relief — no RPGT after five complete years of ownership. However, PRs do not qualify for the lifetime personal exemption (see Exemptions section below).
• Foreigners: Pay 30% for the first five years, then 10% from Year 6 onward. There is no zero-rate tier and no lifetime exemption available.
• Companies: Never reach 0%. The minimum rate for a Malaysian-incorporated company is 10% regardless of holding period.

How Your Chargeable Gain Is Calculated#

RPGT is not applied to the full sale price. It is applied to the chargeable gain, calculated as:

Chargeable Gain = Disposal Price − Acquisition Price − Allowable Expenses

Disposal Price#

The disposal price is typically the agreed sale price in the SPA. LHDN may substitute a market value if the disposal is below market value (for example, a transfer between related parties at an artificially low price).

Acquisition Price#

The acquisition price is what you originally paid, including:

• The purchase price in your original SPA
• Stamp duty paid on the original purchase
• Legal fees paid on the original purchase
• Valuation fees paid at acquisition

If you acquired the property by inheritance or gift, the market value at the time of acquisition is generally used.

Allowable Expenses#

These are capital expenditure costs that can be deducted from your gain. Allowable expenses include:

| Expense Type | Allowable? | Notes | |---|---|---| | Legal fees (current sale) | Yes | Solicitor fees for preparing the SPA and transfer | | Real estate agent commission | Yes | Typically 2%–3% of disposal price | | Renovation and capital improvements | Yes | Must be permanent, structural, value-adding — keep receipts | | Extension or additional construction | Yes | With submission receipts and contractor invoices | | Routine maintenance and repairs | No | Painting, plumbing repairs, replacing fittings | | Furnishings and loose appliances | No | Items not permanently affixed to the property | | Mortgage interest | No | Not deductible for RPGT purposes | | Service charges and quit rent | No | Ongoing property expenses are not capital expenditure |

One mistake sellers commonly make: they include years of maintenance spending in their allowable expense claim, which LHDN disallows during assessment. Only expenditure that permanently enhanced the property's structure or value qualifies.

Worked Example: RM400k Purchase, RM600k Sale#

Scenario: You are a Malaysian citizen. You purchased a freehold terrace house in Petaling Jaya for RM400,000 in March 2022 and sell it in April 2026 — a holding period of just over 4 years (Year 5 applies).

Transaction details:

| Item | Amount | |---|---| | Disposal price (sale price) | RM600,000 | | Original acquisition price | RM400,000 | | Stamp duty paid at purchase | RM9,000 | | Legal fees at purchase | RM6,500 | | Renovation (structural kitchen extension, 2023) | RM28,000 | | Agent commission at sale (2.75%) | RM16,500 | | Legal fees at sale | RM5,500 |

Chargeable gain calculation:

| | Amount | |---|---| | Disposal price | RM600,000 | | Less: Acquisition price | (RM400,000) | | Less: Stamp duty (acquisition) | (RM9,000) | | Less: Legal fees (acquisition) | (RM6,500) | | Less: Renovation (capital, with receipts) | (RM28,000) | | Less: Agent commission (disposal) | (RM16,500) | | Less: Legal fees (disposal) | (RM5,500) | | Chargeable Gain | RM134,500 |

RPGT owed: Year 5 rate for Malaysian citizen = 5%

RM134,500 × 5% = RM6,725

Now consider the same scenario but sold one year earlier — in April 2025 (Year 4 holding):

RM134,500 × 15% = RM20,175

And sold in Year 2 (March 2024):

RM134,500 × 30% = RM40,350

Holding from Year 2 to Year 5 saves RM33,625 in RPGT on the same property. Holding to Year 6+ (selling after March 2028) saves the full RM6,725 as well — total RPGT of zero.

This is why holding period is the single most important variable in Malaysian property investment timing.

If You Have Not Yet Filed Your RPGT: The 60-Day Rule#

RPGT must be filed within 60 days from the disposal date — the date the SPA is signed, not the date of completion or handover.

Forms Required#

| Form | Who Files It | Purpose | |---|---|---| | CKHT 1A | Disposer (seller) | Report the disposal and calculate chargeable gain | | CKHT 2A | Acquirer (buyer) | Acknowledge the acquisition and 3% retention | | CKHT 3 | Disposer — for exemption claims | Claim a specific exemption (e.g. lifetime exemption) |

All CKHT forms can be filed via LHDN's online portal at hasil.gov.my or at any LHDN branch. File early — the 60-day window runs from the SPA date, not the date you receive the proceeds.

Missing the 60-day deadline attracts a penalty under Section 29 of the RPGT Act: 10% of the tax payable, with additional interest accruing. File even if you believe your RPGT is zero — exemptions must still be claimed via CKHT 3, not assumed.

The 3% Retention Sum: How It Works in Practice#

Under the RPGT Act, the buyer (or the buyer's solicitor in a sub-sale transaction) must retain 3% of the total disposal price and remit it to LHDN within 60 days of the disposal date. This applies regardless of whether RPGT is actually owed.

The mechanics:

1. Buyer's solicitor deducts 3% from the purchase price before releasing funds to the seller's solicitor
2. Solicitor files CKHT 2A and remits the 3% to LHDN within 60 days
3. LHDN assesses the seller's CKHT 1A and determines actual tax owed
4. If actual RPGT < 3% retained → LHDN issues a refund to the seller
5. If actual RPGT > 3% retained → seller must pay the balance separately

On a RM600,000 sale, the 3% retention is RM18,000. In the worked example above, the actual RPGT owed is RM6,725 — so the seller would receive a refund of RM11,275 from LHDN. This refund typically takes 3–6 months to process.

If you are selling a property where you expect zero RPGT (e.g. Year 6+ citizen seller), you still cannot skip the retention sum — the buyer is legally required to withhold it. You claim it back by filing CKHT 1A and, if applicable, CKHT 3 (exemption claim).

Exemptions Available to Property Sellers#

1. One-Time Lifetime Exemption — Malaysian Citizens Only#

Every Malaysian citizen is entitled to one exemption, once in their lifetime, on the disposal of a private residential property (rumah kediaman persendirian). This exempts the entire chargeable gain from RPGT — effectively a 0% rate regardless of holding period.

Conditions:

• Applies only to Malaysian citizens (not PRs, not foreigners)
• Property must be residential — not commercial, not mixed-use
• Only one property may benefit from this exemption per lifetime
• You elect to use the exemption on CKHT 3 at the time of filing

Strategic use: If you have two residential properties to sell, use the lifetime exemption on the one with the larger chargeable gain, and time the sale of the other to Year 6+ where the 0% rate applies anyway. The exemption is most valuable when you are selling before the 5-year mark.

2. Low-Cost Housing Exemption#

Disposals of low-cost housing (rumah kos rendah) and low-medium cost housing are fully exempted from RPGT. The specific price thresholds for what qualifies as low-cost are defined by state governments and vary by state, but generally refer to properties originally sold under government affordable housing schemes at prices below RM100,000–RM150,000.

3. Gifts Between Family Members (Gifts Under Section 8)#

A disposal by way of gift between direct family members — spouses, parents, children, and grandchildren — is treated as a no-gain, no-loss transaction for RPGT purposes. The recipient takes on the original acquisition price and date of the donor.

This means:

• No RPGT is triggered at the time of the gift
• The recipient inherits the original acquisition cost and date (not the market value at gifting)
• When the recipient eventually sells, their RPGT holding period runs from the original acquisition date of the donor — not the date of the gift

This is a legitimate estate planning tool, but the deferred gain does not disappear — it is merely transferred to the recipient to manage upon their eventual disposal.

4. Property Acquired Before 1 January 2000#

Properties acquired before 1 January 2000 (the date RPGT was previously suspended) use the 31 December 2001 market value as the acquisition price for RPGT purposes, if no RPGT was payable at the time of acquisition. This is sometimes referred to as the "deemed acquisition cost" and can significantly reduce the chargeable gain on older properties.

RPGT and the Stamp Duty Connection#

When selling a property, your upfront costs also include stamp duty on the new SPA — but that stamp duty is paid by the buyer, not the seller. As the seller, your cost exposure is:

• RPGT (if applicable)
• Agent commission (2%–3%)
• Legal fees for the SPA and transfer documentation
• Any outstanding quit rent (cukai tanah) or assessment (cukai pintu) arrears that must be settled before transfer

See our stamp duty guide for the full breakdown of what the buyer pays on their side of the transaction.

If you are simultaneously buying a replacement property, you are managing two transactions at once — RPGT exposure as a seller, and stamp duty plus loan eligibility as a buyer. Read the home loan guide before committing to a simultaneous sale and purchase — the timing of your RPGT retention sum refund can affect your available cash for the new purchase.

Tax Planning Considerations Before You Sell#

Holding Period Is the Most Powerful Variable#

For Malaysian citizens and PRs, the difference between a Year 5 sale (5% rate) and a Year 6 sale (0% rate) on a RM134,500 gain is RM6,725. The question is whether waiting 12 more months makes sense given market conditions, opportunity cost, and your personal circumstances. Run the numbers both ways.

Lifetime Exemption: Use It Strategically#

Do not use the lifetime exemption on a Year 6+ sale — the rate is already 0% without it. Reserve the exemption for a situation where you must sell before the 5-year mark and the gain is significant. Once used, it is gone permanently.

Document All Capital Expenditure#

Keep every invoice and receipt for renovation work throughout your ownership period. Structural work, extensions, built-in cabinetry permanently fixed to the property — these all reduce your chargeable gain. A RM28,000 renovation that reduces a RM134,500 gain to RM106,500 saves RM1,400 in RPGT at the 5% rate, or RM8,400 at the 30% rate. The documentation habit pays off more at higher rate periods.

RPGT vs Income Tax on Property Income#

If LHDN determines that you are in the business of property trading (frequent buying and selling, short holding periods, declared business income), your gains may be reclassified as income tax rather than RPGT. Income tax rates go up to 30% for higher incomes — and unlike RPGT, there is no holding-period relief and no 0% tier. This reclassification risk is most relevant for property investors with multiple short-cycle disposals.

Connecting RPGT to Your Broader Property and Tax Strategy#

RPGT is one piece of the property ownership cost picture. For first-time buyers and first-time sellers:

• If you are still planning your purchase, read the first-time home buyer guide for a full breakdown of schemes, eligibility, and the purchase process
• Property ownership generates rental income that must be declared — see the income tax reliefs guide for what expenses are deductible against rental income
• If you are filing your annual tax return at the same time as processing an RPGT transaction, the income tax filing guide covers the e-filing process step by step

RPGT is separate from your annual income tax return. File CKHT forms within 60 days of disposal — independently of the April/May income tax filing cycle.

Summary: What You Need to Know Before Selling#