RPGT Exemptions in Malaysia — Complete Guide to CKHT Exemptions
A comprehensive guide to all Real Property Gains Tax (RPGT/CKHT) exemptions available to Malaysian individuals and companies
Real Property Gains Tax (RPGT), or Cukai Keuntungan Harta Tanah (CKHT) in Bahasa Malaysia, is a tax on gains from the disposal of real property in Malaysia. However, the RPGT Act 1976 provides for several important exemptions that can significantly reduce or eliminate your tax liability. Understanding which exemptions apply to your situation is crucial before disposing of any property.
Current RPGT Rates (2025)
RPGT is levied on the chargeable gain from a property disposal. The rate depends on how long the property was held before disposal:
Malaysian Citizens & Permanent Residents
| Within 1 year | 30% |
| In the 2nd year | 20% |
| In the 3rd year | 15% |
| In the 4th year | 10% |
| In the 5th year | 5% |
| After 5 years | 0% |
Non-Citizens / Foreigners
| Within 5 years | 30% |
| After 5 years | 10% |
Companies (all disposals)
| Within 3 years | 30% |
| In the 4th year | 20% |
| In the 5th year | 15% |
| After 5 years | 10% |
The LexHub RPGT Calculator automatically computes your RPGT based on current rates and allows you to factor in applicable exemptions.
Calculate Your RPGT →RPGT Exemptions Under Schedule 4, RPGT Act 1976
Individual Annual Exemption
Every Malaysian individual (citizen or permanent resident) is entitled to a one-time exemption per year of 10% of the chargeable gain or RM 10,000, whichever is greater. This exemption applies automatically to every property disposal — no application is required. For example, if your chargeable gain is RM 80,000, the exemption reduces it to RM 72,000 (RM 80,000 × 10% = RM 8,000 exemption; since RM 10,000 > RM 8,000, the RM 10,000 exemption applies). Note: this exemption applies per disposal per year — if you dispose of two properties in the same year, the exemption applies to each disposal independently.
One-Time Private Residence Exemption
A Malaysian citizen or permanent resident is entitled to a once-in-a-lifetime full exemption on the chargeable gain from the disposal of one private residence (used as their principal residence). To qualify: (1) the property must be a residential property, (2) the individual must have occupied it as their own residence, and (3) the exemption election must be made in writing to the Director General of Inland Revenue. Once elected, this exemption cannot be used again for any future disposal.
Transfer Between Spouses (Gift / Love & Affection)
A transfer of real property between spouses on a basis of natural love and affection is fully exempt from RPGT. The transferee spouse is deemed to have acquired the property at the same acquisition price and date as the transferor — meaning the holding period and original cost carry over. This exemption applies only to transfers between legal spouses (not divorced spouses), and the transfer must be a genuine gift with no monetary consideration.
Transfer on Death
A transfer of real property arising from the death of the owner — whether via a Grant of Probate, Letters of Administration, a Faraid Certificate, or a Deed of Gift (hibah) — is fully exempt from RPGT. The beneficiary acquires the property at the market value at the date of death, which becomes the new acquisition price for future RPGT purposes.
Gift to a Family Member
A disposal by way of gift to a child, grandchild, parent, or grandparent (or the spouse of any of these) is exempt from RPGT, provided the transferee is a Malaysian citizen. As with the spouse transfer exemption, the recipient acquires the property at the original acquisition price and date — so future gains will be calculated from the original cost basis.
Compulsory Acquisition by Government
Any disposal arising from compulsory acquisition under the Land Acquisition Act 1960 is fully exempt from RPGT. Where the acquisition is by a government authority or statutory body for public purposes, the full compensation received is exempt from RPGT regardless of the gain.
Low-Cost / Affordable Housing
Disposal of certain affordable housing units — particularly those under state government low-cost housing schemes (e.g. PPR, PPRT) — may be exempt from RPGT under specific gazette orders. Eligibility depends on the scheme and state. Consult a solicitor or LHDN for confirmation on specific developments.
Liquidation / Winding Up (Companies)
Where property is transferred by a company to its shareholders on liquidation or winding up, an RPGT exemption may apply under certain conditions as prescribed in the RPGT Act. The specific requirements are technical and should be confirmed with a tax advisor.
Frequently Asked Questions
Can I use the private residence exemption more than once?▼
No. The private residence (private dwelling house) exemption under paragraph 2, Schedule 4 of the RPGT Act 1976 is a once-in-a-lifetime exemption per individual. Once you have elected to use it on any one property disposal, you cannot use it again for any future disposal, even if you sell a different home.
Is RPGT applicable to foreign nationals selling property in Malaysia?▼
Yes. RPGT applies to all persons (citizens, permanent residents, and foreigners) disposing of real property in Malaysia. For non-citizens and foreign companies, the rate is 30% for disposals within 5 years and 10% after 5 years. Non-citizens are not entitled to the private residence exemption or the RM 10,000 annual exemption.
Does RPGT apply if I sell at a loss?▼
No. RPGT is only levied on chargeable gains — that is, where the disposal price exceeds the acquisition price plus allowable expenses. If the disposal results in a loss, no RPGT is payable. However, RPGT losses cannot be used to offset income tax or other taxes.
How is the chargeable gain calculated for RPGT?▼
Chargeable gain = Disposal price − (Acquisition price + Incidental costs of acquisition + Enhancement costs + Preservation costs + Legal fees + Disposal costs). Allowable deductions include renovation costs that enhance the property's value (not mere repairs), legal fees for the original purchase and the current sale, and agent commissions on disposal.
Who is responsible for paying RPGT — buyer or seller?▼
The RPGT liability falls on the vendor (seller). However, the purchaser is required to retain 3% of the purchase price (for Malaysian citizens/PRs) or 7% (for non-citizens) and remit it to LHDN on behalf of the vendor — this is the RPGT retention mechanism. The vendor then files CKHT Form 1A and may receive a refund if the actual RPGT payable is less than the retention amount.
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