Q.
What is RPGT? Explain in brief how RPGT is calculated.
A.
RPGT or Real Property Gain Tax is tax levied on Real Property or Shares of a Real Property Company based on the Real Property Gain Tax Act 1976.
Disposal price:
Assuming this is a second hand car dealer where an old car is refurbished for resale. Whatever cost involved in making new the car is to be deducted from the selling price. Thus includes the advertising fees and salesman commissions.
Therefore, for houses, it is the same. Cost of renovation, defending title or making good damages and agent fees are to be deducted from the selling price. This then arrive at the Disposal Price.
Acquisition Price:
As the second hand car example above, whatever insurance claims and compensation received from earlier accidents are to be counted as surplus, thus to be deducted from the purchase price. If any buyer forfeited deposit in booking for the car, it is to be taken as earning from the car. This will reduce the purchase price.
Similarly, in the context of property, compensation received on any damages done onto it, like compensation from neighbour for roof damage due to falling trees from adjacent building, is taken to reduce the purchase price. In case of fire, insurance claim is treated as benefit received and should be deducted from the purchase price. Any deposits from potential buyer are also counted as benefit received, and deducted from the purchase price to arrive at the Acquisition Price.
Disposal Price - Acquisition Price = Gain subject to RPGT at the schedule below: (2013/14)
Budget 2014, the current RPGT Rates.
[From 2013 to 2014, there is an increase in RPGT like below:
Hence, if you were a seller who is thinking to flip your property on the 3rd year, it would be extra 10% tax that would hold you back from selling in 2014 because the RPGT rate is still at 30% instead of the old scheme 20%. Therefore, this year 2014, there would be slower transactions as more pressures are on the sellers to wait until 2015 when the property is 4 years old, and at a lower RPGT bracket 20%.
In short, there is a delay of selling, and thus, less speculative buy and sell.]
Ref:
Own account on RPGT compared.
RPGT on Budget 2014, from loanstreet at http://loanstreet.com.my/learning-centre/rpgt-in-malaysia
Open account with diagrams from JPPH, at http://www.jpph.gov.my/V2/pdf/Real_Property_Gains_Tax.pdf