Real Property Gains Tax (RPGT) in Malaysia: How Much You Pay When You Sell

When you sell a property in Malaysia and make a profit, LHDN (Lembaga Hasil Dalam Negeri) takes a share of that gain. Real Property Gains Tax (RPGT) is charged on the net profit from the sale, at rates ranging from 0% to 30% depending on how long you owned the property. Malaysian citizens who have held a property for six or more years pay zero RPGT on a direct disposal; everyone else is on a sliding scale that can bite hard on early sales.

This guide walks through the 2025-2026 rate schedule, every major exemption, and the exact steps LHDN uses to calculate your taxable gain. See the costs of buying property in Malaysia for the buyer’s equivalent, or the full costs-and-taxes hub for a wider view of property transaction costs.

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What is RPGT and who pays it?

RPGT is a capital gains tax imposed under the Real Property Gains Tax Act 1976. It applies when a chargeable asset changes hands at a gain. Chargeable assets include:

• Land and buildings (residential, commercial, industrial)
• Shares in a real property company (RPC), where at least 75% of its assets are real property

RPGT is paid by the seller (the disposer). The buyer is not taxed on the gain, but they do have a legal obligation to withhold a retention sum and remit it to LHDN on the seller’s behalf (explained below).

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RPGT rate schedule by holding period (2025-2026)

The rate that applies depends on how many years elapsed between the date you signed the Sale and Purchase Agreement (SPA) to acquire the property and the date you sign the SPA to dispose of it. Use the SPA date, not the date of vacant possession or title transfer.

Holding period	Malaysian citizens and PRs	Companies	Non-citizens and non-PRs
Year 1 (up to 1 year)	30%	30%	30%
Year 2	30%	30%	30%
Year 3	30%	30%	30%
Year 4	20%	20%	30%
Year 5	15%	15%	30%
Year 6 onwards	0%	10%	10%

Source: LHDN RPGT Rate Schedule, effective from 1 January 2022 onwards.

Key point: Malaysian citizens and permanent residents who sell in year six or later pay no RPGT at all on direct property disposals. Selling even one day before the six-year mark means paying 15%, which on a RM500,000 gain equals RM75,000 in tax. The calendar matters enormously.

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How your chargeable gain is calculated

RPGT is not charged on the full sale price. It is charged on your net chargeable gain after deducting acquisition costs and allowable expenditure.

The formula

Chargeable Gain = Disposal Price − Acquisition Price − Allowable Expenditure

After arriving at the chargeable gain, individuals deduct a personal exemption before applying the rate.

Step-by-step breakdown

Step 1: Disposal price

This is the price received from the buyer as stated in the SPA, including any non-cash consideration. If LHDN considers the sale price below market value (for example, in a related-party sale), they may substitute the open market value.

Step 2: Acquisition price

This is what you originally paid when you bought the property, plus incidental costs at the time of purchase: stamp duty on the transfer instrument, stamp duty on the loan agreement, legal fees for the purchase, and valuation fees.

Step 3: Allowable expenditure

You can deduct costs that enhanced or preserved the property’s value and that are “reflected in the state of the asset at the time of disposal” (LHDN wording). These include:

• Capital improvement works (extensions, renovations that add or preserve value)
• Legal fees on the current disposal
• Real estate agent commission on the current sale

What you cannot deduct: routine maintenance and repairs, furniture and loose appliances, mortgage interest, and property management service charges. If in doubt, keep receipts and get confirmation from your solicitor before filing.

Step 4: Personal exemption for individuals

Each individual is entitled to deduct the higher of RM10,000 or 10% of the chargeable gain from every disposal. This applies per transaction.

Step 5: Apply the rate

Multiply the remaining net gain by the applicable rate from the table above.

Worked example

Fatimah bought a Kuala Lumpur terraced house in January 2021 for RM480,000 (including RM18,000 in stamp duty and legal fees). She spent RM30,000 on a capital extension and sells in March 2025 for RM650,000, paying RM12,750 in agent commission and legal fees.

Item	Amount
Disposal price	RM650,000
Less: acquisition price + incidental costs	(RM498,000)
Less: disposal costs	(RM12,750)
Gross chargeable gain	RM139,250
Less: personal exemption (10% = RM13,925)	(RM13,925)
Net chargeable gain	RM125,325

Her SPA dates place the sale in year 4, so the rate is 20% for a Malaysian citizen.

RPGT payable = RM125,325 × 20% = RM25,065

Had she waited until January 2027 (year 6), her RPGT would be RM0.

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Major exemptions you should know

Once-in-a-lifetime private residence exemption

A Malaysian citizen or permanent resident may elect a full exemption on the gain from the disposal of one private residence in their lifetime. The property must have been used as a private residence. The election is made via Form CKHT 3 through the e-CKHT portal, and it is irrevocable once made. Use this exemption thoughtfully: it is a one-shot benefit.

Disposal to a family member as a gift

Transfers between spouses, parents and children (including adopted children), or grandparents and grandchildren at no gain or no loss are treated as a no-gain, no-loss disposal. No RPGT arises. The recipient inherits the original acquisition price for future RPGT computation.

Death and inheritance

A disposal under a will or intestate succession is not subject to RPGT. However, when the beneficiary eventually sells the inherited property, RPGT is computed using the market value at the date of death as the acquisition price.

Government-compulsory acquisition

If the government compulsorily acquires your land, no RPGT is payable on that disposal.

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The buyer’s retention obligation

From the buyer’s side, there is a legal duty under Section 21B of the RPGT Act. When a property sale involves a cash component, the buyer must retain and remit a sum to LHDN within 60 days of the disposal date:

• 3% of the total consideration where the seller is a Malaysian citizen or permanent resident
• 7% of the total consideration where the seller is a company, non-citizen, or non-permanent resident

This is not additional tax. It is a withholding credit against the seller’s RPGT liability. If the actual RPGT turns out to be less than the amount retained, the seller can claim a refund from LHDN.

In practice, this means your conveyancing solicitor will normally coordinate the retention mechanics, but as the seller you should factor this into your net proceeds calculation.

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Filing under the 2025 self-assessment system

From 1 January 2025, RPGT moved to a self-assessment framework, aligning it with income tax. The key changes:

1. You compute your own tax. The return you file is treated as your assessment. LHDN audits it rather than issuing a separate notice of assessment.
2. Filing is fully electronic. Forms are submitted via the e-CKHT portal on MyTax (mytax.hasil.gov.my). Paper submissions are not accepted and are treated as a failure to file.
3. The deadline is 60 days from the date of disposal for both the disposer (Form CKHT 1A) and the acquirer (Form CKHT 2A). If you are exercising the once-in-a-lifetime private residence exemption, file Form CKHT 3 alongside.
4. Payment is due within 90 days of the disposal date for any balance of tax after the buyer’s retention credit.
5. Late penalties are automatic: 10% of the tax due for late payment, and up to three times the tax charged for failure to file.

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Key takeaways

• RPGT is charged on your net profit from a property sale, not the gross sale price.
• Malaysian citizens and PRs pay 0% if they have held the property for six or more years. Companies and foreigners pay 10% from year six onwards.
• The 30% rate applies to disposals in years one through three for all categories of seller.
• Every individual gets a free deduction of the higher of RM10,000 or 10% of the chargeable gain on each disposal.
• The once-in-a-lifetime private residence exemption eliminates RPGT entirely for one residential property, but is irrevocable once elected.
• Buyers must retain 3% (citizens and PRs) or 7% (others) of the purchase price and remit it to LHDN as a withholding credit.
• Since January 2025, RPGT runs on a self-assessment basis: you compute, file electronically via e-CKHT, and pay within 60 to 90 days of disposal.
• Capital improvements are deductible; routine maintenance and furnishings are not.

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Frequently asked questions

Does RPGT apply if I sell at a loss?

No. RPGT is only charged on a chargeable gain. If your disposal price is less than your acquisition price plus allowable expenditure, the result is an allowable loss. You cannot offset this loss against income tax, but you may carry it forward to set against future RPGT gains on other property disposals.

My holding period falls near the six-year mark. How is it counted?

LHDN counts the year of acquisition as year one. A property bought in March 2019 and sold in March 2025 is in year six (0% for citizens and PRs). Sold in February 2025, it is still year five (15%). Your solicitor can confirm the SPA dates.

Can I deduct the loan interest I paid over the years?

No. Mortgage interest is not an allowable deduction for RPGT purposes. Only capital expenditure that is reflected in the physical state of the property at the time of disposal is deductible.

What if I sell below market value to a relative who is not a spouse or child?

The family gift exemption covers only direct family (spouse, parent, child, grandparent, grandchild). A below-market sale to a sibling or cousin may prompt LHDN to substitute open market value as the disposal price, raising the deemed gain.

I am a Malaysian citizen who has already used the once-in-a-lifetime exemption. Can I claim any relief on a second home sale?

You can still deduct the standard individual exemption (higher of RM10,000 or 10% of chargeable gain) on every disposal. You may also benefit from the zero-rate in year six and beyond. However, the once-in-a-lifetime full residential exemption is gone once elected.