The imposition of the Real Property Gains Tax is provided for under the Real Property Gains Tax Act 1976 (Act 169).

It is a tax on chargeable gains derived from the sale of real property. Under the Act, real property means any property situated in Malaysia and any interest, option or right on the property. There is a chargeable gain when the disposal (sale) price exceeds the acquisition ( purchase ) price. When disposal price is less than the acquisition price, then there is an allowable loss. There is no chargeable gain or allowable loss if the disposal price is equal to the acquisition price.

The disposal price is the amount of money or the value of consideration in monetary terms obtained from the disposal of any asset, less :

• the cost or expenditure incurred in upgrading or increasing the value of the asset;
• the cost or expenditure incurred at any time after the acquisition of the asset by the purchaser to determine, maintain or defend his right over the asset; and
• the cost incurred by the vendor in selling the asset.

The acquisition price of an asset is the amount or value of the consideration in money or money's worth paid or given for the acquisition of the asset plus:

• any sum received by way of compensation for any kind of damage or injury to the asset;
• any sum received under a policy of insurance for any kind of damage or injury to or the loss, destruction or depreciation of the asset;
• any sum forfeited as a deposit made in connection with an intended transfer of the asset.

Rates of tax are as follows:

Disposal	Citizens &  permanent  residents	Non-permanent  resident / non-  citizen	Company
Disposal within two years after the date of acquisition of the chargeable asset	30%	30%	30%
Disposal in the third year	20%	30%	20%
Disposal in the fourth year	10%	30%	10%
Disposal in the fifth year	5%	30%	5%
Disposal in the sixth year or there after	0%	5%	5%

Company is to determine the market value of the property disposed or acquired. Appeal on the assessment of tax can be made to the Special Commissioners.

Real Property Gains
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.

Chargeable Assets
An Act enacted by the Duli Yang Maha Mulia Seri Paduka Baginda Yang di-Pertuan Agong as the Real Property Gain Tax Act 1976. Interpreted chargeable asset as real property gain tax, shall be charged in accordance to this Real Property Gain Tax Act 1976 in respect of chargeable gain accruing on the disposal of any real property. Subject to this Act, the chargeable gain from disposal of real property shall be charged according to the category Tax Rates in Ringgit Malaysia.

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

Exemption
The following disposal of real property which do not fall under Real Property tax Act 1976:

1. Transferring ownership from husband to wife (wives) or vice versa.
2. Inheritance of real property from deceased.
3. Transfer of ownership from an individual to a company where he or she has shares in the company.
4. Transfer of an asset as collateral for loan.
5. Compulsory acquisition by Government under any law. (Eminent Domain)
6. Disposal of assets as charity.


Tax for sales of property
Buyers and sellers have to file their forms under the Real Property Gains Tax Act to avoid penalty. The Seller has to pay tax for profit on disposal of property under the Real Property Gains Tax Act. Rate varies according to the number of years you hold the property.

Number of years	Tax rate
Within 1-2 years	30%
3	20%
4	15%
5	5%
Thereafter	None