Property tax

RPGT in Malaysia: How Property Gains Tax Works (2026)

A plain-English walkthrough of Malaysia's Real Property Gains Tax — how the chargeable gain is calculated, what the Schedule 5 rates are for citizens, companies, and foreigners, which exemptions reduce your bill, and two worked examples using verified LHDN figures.

When you sell a property in Malaysia at a profit, the government takes a share of that gain before the money reaches your account. That share is Real Property Gains Tax (RPGT) — a tax on chargeable gains from disposing of real property or shares in a real property company, governed by the Real Property Gains Tax Act 1976 and administered by LHDN (the Inland Revenue Board). The rate you pay, and whether any exemption applies, depends on how long you held the property and whether you are a Malaysian citizen, a permanent resident, a company, or a foreigner. This guide walks through the full picture using verified figures from LHDN, including two worked examples that show the arithmetic step by step.

What is RPGT?

RPGT is a tax on the chargeable gain you make when you dispose of real property — meaning land, buildings, or an interest in land — or shares in a real property company (RPC), which is a company whose total tangible assets consist of at least 75% real property. The tax is self-assessed and declared via Form CKHT, filed by both the disposer (seller) and the acquirer (buyer).

RPGT is distinct from stamp duty, which the buyer pays on the transfer instrument. RPGT is the seller's obligation, calculated on the profit — not the sale price. If you sell at a loss, there is no RPGT liability, and the loss may be carried forward to offset future gains from property disposals.

How the chargeable gain is calculated

The starting point is a simple subtraction, but what counts as the disposal price and the acquisition price requires care:

Adjusted disposal price = sale price minus allowable disposal costs

Adjusted acquisition price = purchase price plus allowable acquisition costs

Chargeable gain = adjusted disposal price minus adjusted acquisition price

Allowable disposal costs — costs that reduce your disposal price and therefore reduce your gain — include:

Real estate agent commission
Legal fees on the sale (solicitor fees for the SPA)
Advertising costs directly attributable to the sale
Valuation fees incurred for the disposal

Allowable acquisition costs — costs that increase your cost base and therefore reduce your gain — include:

The original purchase price paid under the SPA
Stamp duty on the Sale and Purchase Agreement, the Memorandum of Transfer (MOT), and the loan agreement
Legal fees and valuation fees paid when you bought
Cost of permanent improvements — extensions, renovations that add to the property's structure or fabric; renovation receipts are your evidence

Routine maintenance and repair costs — repainting, replacing fixtures, servicing — do NOT count as allowable acquisition costs. Only permanent improvements that add lasting value to the property may be added to your cost base.

Keeping receipts for every allowable cost, on both the buying and selling sides, is the single most important thing you can do to reduce your RPGT legally. LHDN may ask for supporting documents during a review.

The Schedule 5 rate table

Once you have the chargeable gain, the rate applied depends on your category and how long you held the property. Holding period is measured from the date of the purchase SPA to the date of the sale SPA — not the date of completion or title transfer.

Malaysian citizens and permanent residents (individuals):

Within 3 years: 30%
4th year: 20%
5th year: 15%
6th year onwards: 0%

The 0% rate for citizens and PRs from the 6th year was introduced effective 1 January 2022, replacing the previous 5% rate. For most long-term homeowners and buy-to-let investors who held for six or more years, there is no RPGT at all.

Malaysian companies:

Within 3 years: 30%
4th year: 20%
5th year: 15%
6th year onwards: 10%

Companies do not benefit from the 0% rate — they remain subject to a 10% rate from the 6th year onwards.

Foreigners (non-citizen individuals) and foreign companies:

Within 3 years: 30%
4th year: 30%
5th year: 30%
6th year onwards: 10%

Non-citizen, non-PR individuals and foreign companies face a flat 30% for the first five years (the rate does not step down in the 4th and 5th year as it does for citizens), then 10% from the 6th year onwards.

Permanent residents (PR holders) are treated the same as Malaysian citizens for RPGT purposes — they benefit from the 0%, 15%, 20%, 30% step-down scale, not the foreigner flat rate.

Exemptions that reduce your RPGT

Two exemptions are most relevant to individual sellers. Neither applies automatically to companies.

Schedule 4 paragraph 2 exemption (the standard individual exemption): Every individual — citizen, PR, or non-citizen — is entitled on every disposal to an exemption equal to the greater of RM10,000 or 10% of the chargeable gain. This is sometimes called the "floor exemption." It applies automatically; you do not need to elect it. It reduces the net chargeable gain before the Schedule 5 rate is applied.
Once-in-a-lifetime private residence exemption (section 8): Malaysian citizens and PRs may elect, via Form CKHT 3, to apply a full exemption on the gain from disposing of one private residence. "Private residence" means a dwelling occupied or intended for occupation by the individual as their principal private residence. The election is irrevocable and may only be made once in a lifetime. Foreigners and companies cannot use this exemption. Once used, subsequent disposals of residential property — including a future family home — will not qualify.

The Schedule 4 exemption and the once-in-a-lifetime private residence exemption cannot both apply to the same disposal — if you elect the private residence exemption, the gain is fully exempt and the Schedule 4 exemption is moot.

Two worked examples

Example 1 — citizen, 4th year, 10% exemption branch:

Purchase price: RM 500,000
Buying costs (stamp duty, legal, valuation): + RM 30,000
Adjusted acquisition price: RM 530,000
Sale price: RM 700,000
Selling costs (agent, legal, advertising): − RM 20,000
Adjusted disposal price: RM 680,000

Chargeable gain: RM 150,000
Sch4 exemption (max RM10k, 10%): RM 15,000
Net chargeable gain: RM 135,000
4th-year citizen rate: 20%
RPGT payable: RM 27,000

In this example, 10% of RM150,000 is RM15,000 — which exceeds the RM10,000 floor — so RM15,000 is the exemption. The tax is applied to the remaining RM135,000.

Example 2 — citizen, 5th year, RM10,000 floor branch:

Chargeable gain: RM 96,808
10% of gain: RM 9,680.80
Floor applies (10% < RM10k): RM 10,000
Net chargeable gain: RM 86,808
5th-year citizen rate: 15%
RPGT payable: RM 13,021.20

Here, 10% of the gain is only RM9,680.80, which is below the RM10,000 floor. The floor wins, so the full RM10,000 is deducted. This branch occurs whenever the chargeable gain is below RM100,000.

How to reduce your RPGT legally

RPGT is a function of rate, gain, and exemptions — each of which can be optimised within the law:

Hold longer to drop the rate. The rate step-down for citizens/PRs is steep: 30% in the first three years, then 20%, 15%, and 0% from year six. Timing a disposal just into the 6th year eliminates the tax entirely for citizens and PRs. Even moving from the 4th to the 5th year saves 5 percentage points on the rate.
Keep all receipts for permanent improvements. Every ringgit of documented improvement cost adds to your cost base, reducing the chargeable gain. Kitchen extensions, structural renovations, additional rooms — all are allowable if the work is permanent. Ask your contractor for a proper invoice that describes the work.
Claim all allowable disposal and acquisition costs. Agent commissions, legal fees, and valuation fees on both sides of the transaction are deductible. Do not overlook the stamp duty you paid when you originally bought — it increases your cost base.
Time the disposal to maximise the Schedule 4 exemption. The exemption is the greater of RM10,000 or 10% of the gain. On a very large gain, 10% can be substantial — but it applies per disposal, not per year.
Use the once-in-a-lifetime private residence exemption strategically. Because it is irrevocable and can only be used once, do not spend it on a small gain when you might sell a more valuable principal home in the future. The exemption is most powerful when applied to the property with the highest chargeable gain.

Filing: Form CKHT and your obligations

RPGT is self-assessed. Both the disposer (seller) and the acquirer (buyer) must file CKHT forms with LHDN for every property disposal — even if no tax is payable. The key forms are:

CKHT 1A — filed by the disposer (individual seller)
CKHT 1B — filed by the disposer (company seller)
CKHT 2A — filed by the acquirer (buyer) in all cases
CKHT 3 — election form for the once-in-a-lifetime private residence exemption

Under RPGT legislation, the acquirer is also required to retain a portion of the sale proceeds and remit it to LHDN on behalf of the disposer (a withholding mechanism). Your solicitor will typically handle this retention at completion. Confirm the exact current timelines and withholding rates with your solicitor or LHDN, as administrative rules can change.

All figures and rates in this guide are for educational reference only and do not constitute tax or legal advice. RPGT rates and exemption thresholds may be revised in annual budgets. Verify the current position with LHDN (hasil.gov.my) or a licensed tax agent before any transaction.

Calculate your RPGT and explore property costs

Use the RPGT Calculator to enter your own purchase price, sale price, costs, holding period, and seller category — it applies the Schedule 5 rates, computes the Schedule 4 exemption, and shows your estimated RPGT in seconds. If you are also thinking about the upfront buying costs on your next property, the stamp duty and legal fees guide breaks down MOT duty, loan duty, first-home exemption eligibility, and SRO 2023 solicitor fees — all the cash you need before you get the keys.

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