RPGT is not always payable. That is the part most property investors miss. They see the rate table — 30% in year 1, 20% in year 4, 10% for foreigners after year 5 — and assume the full rate applies to every disposal. It does not. Malaysia's RPGT framework includes multiple exemptions that can reduce or eliminate the tax entirely. The difference between a RM50,000 RPGT bill and a RM0 bill often comes down to knowing which exemptions exist and how to claim them.
This guide is the comprehensive list. Every RPGT exemption available under the Real Property Gains Tax Act 1976, who qualifies, and how to claim each one.
Exemption 1: Once-in-Lifetime Private Residence Exemption
Who qualifies: Malaysian citizens and permanent residents only (Section 8, RPGTA 1976; LHDN — Exemption).
What it does: Exempts the entire chargeable gain from RPGT on the disposal of one private residence. This is the most valuable exemption in the RPGT framework.
Conditions:
| Requirement | Detail |
|---|---|
| Citizenship | Must be Malaysian citizen or PR at the time of disposal |
| Property type | Must be a private residential property |
| Ownership | Must be owned by the individual (not through a company) |
| Residency | The property must have been used as the individual's private residence |
| One-time use | Can only be claimed once in your lifetime |
How to claim: File Form CKHT 1A with a declaration that this is your once-in-lifetime exemption. Attach proof of residence (utility bills, IC address, etc.).
Strategic note: Do not waste this exemption on a small gain. If you own multiple properties and plan to sell over time, use it on the disposal with the largest chargeable gain. Once claimed, it is gone forever.
The once-in-lifetime exemption has no cap on the gain amount. Whether your chargeable gain is RM50,000 or RM5,000,000, the entire amount is exempt. This makes it the single most powerful tax benefit available to Malaysian property owners.
Exemption 2: Automatic RM10,000 or 10% Exemption
Who qualifies: All individuals — Malaysian citizens, permanent residents, and foreigners (LHDN — Exemption; Paragraph 2, Schedule 4, RPGTA 1976). Companies do not qualify.
What it does: Automatically exempts the greater of RM10,000 or 10% of the chargeable gain from RPGT on every disposal. This applies in addition to any other exemptions (except the once-in-lifetime exemption, which already covers the full gain).
How it works:
| Chargeable Gain | 10% of Gain | Greater Of | Exempted Amount |
|---|---|---|---|
| RM50,000 | RM5,000 | RM10,000 | RM10,000 |
| RM100,000 | RM10,000 | RM10,000 | RM10,000 |
| RM200,000 | RM20,000 | RM20,000 | RM20,000 |
| RM500,000 | RM50,000 | RM50,000 | RM50,000 |
| RM1,000,000 | RM100,000 | RM100,000 | RM100,000 |
How to claim: Automatic. LHDN applies this exemption when processing your CKHT return. You do not need to file a separate claim, but ensure your return is correctly completed.
Who does NOT qualify: Companies, LLPs, and trusts (non-natural persons). They pay RPGT on the full chargeable gain with no automatic exemption. Note: foreign individuals do qualify for this exemption — it applies to all natural persons regardless of citizenship.
Exemption 3: Transfer Between Spouses
Who qualifies: Legally married husband and wife (under civil law or Islamic law). The transferor must be a Malaysian citizen (effective 1 January 2018) (LHDN — Disposal Price Deemed Equal to Acquisition Price).
What it does: A transfer of property between spouses is treated as a disposal at no gain, no loss. No RPGT is triggered.
| Detail | Rule |
|---|---|
| RPGT on transfer | RM0 (no gain, no loss) |
| Acquisition price for receiving spouse | Same as the transferring spouse's original acquisition price |
| Holding period for receiving spouse | Starts from the transferring spouse's original acquisition date |
Important: The receiving spouse inherits the original cost base and holding period. When they eventually sell, RPGT is calculated from the original acquisition — the spousal transfer does not reset the clock.
How to claim: File CKHT forms declaring the transfer as between spouses. Attach marriage certificate.
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Exemption 4: Gifts to Family (Love and Affection)
Who qualifies: Transfers between parents and children, grandparents and grandchildren, husband and wife — where the donor is a Malaysian citizen (effective 1 January 2017) (LHDN — Disposal Price Deemed Equal to Acquisition Price; Paragraph 12, Schedule 2, RPGTA 1976).
What it does: Similar to spousal transfer — the gift is treated at no gain, no loss for RPGT purposes.
| Relationship | RPGT Treatment | Stamp Duty Treatment (from 1 April 2023) |
|---|---|---|
| Husband to wife / wife to husband | No gain, no loss (donor must be citizen) | 50% remission on stamp duty |
| Parent to child | No gain, no loss (donor must be citizen) | 100% exemption on first RM1M, 50% on excess (recipient must be citizen) |
| Grandparent to grandchild | No gain, no loss (donor must be citizen) | 100% exemption on first RM1M, 50% on excess (recipient must be citizen) |
| Siblings | Not exempt — treated as disposal at market value | Full stamp duty |
| Uncle/aunt to nephew/niece | Not exempt | Full stamp duty |
Critical limitation: This exemption only covers the RPGT on the gift itself. The recipient inherits the donor's acquisition price and holding period. When the recipient eventually sells the property, RPGT is calculated based on the original donor's cost base.
Exemption 5: Citizens and PRs — 0% Rate After Year 5
Who qualifies: Malaysian citizens and permanent residents.
What it does: Properties disposed of in the 6th year or beyond (more than 5 years from acquisition) attract a 0% RPGT rate. This is effectively a full exemption (LHDN — RPGT Rates).
| Holding Period | Citizen/PR Rate | Company Rate | Foreigner Rate |
|---|---|---|---|
| Within 3 years | 30% | 30% | 30% |
| Year 4 | 20% | 20% | 30% |
| Year 5 | 15% | 15% | 30% |
| Year 6+ | 0% | 10% | 10% |
This is not technically an "exemption" — it is a 0% rate. But the effect is identical: no RPGT payable. For planning purposes, Malaysian citizens should aim to hold investment properties for at least 6 years (counted from SPA date) to reach the 0% bracket.
Exemption 6: Property Acquired Before 2000
Who qualifies: Any person (citizen, PR, company, foreigner) who acquired property before 1 January 2000.
What it does: For properties acquired before 2000, the taxpayer may elect to use the market value as of 1 January 2000 as the acquisition price instead of the actual purchase price.
Why this matters: If you bought a property for RM50,000 in 1985 and the market value on 1 Jan 2000 was RM200,000, using the RM200,000 as your acquisition price significantly reduces the chargeable gain on a current sale.
| Acquisition Year | Purchase Price | Market Value 1 Jan 2000 | Current Sale Price | Gain (Original) | Gain (Using 2000 Value) |
|---|---|---|---|---|---|
| 1985 | RM50,000 | RM200,000 | RM500,000 | RM450,000 | RM300,000 |
| 1995 | RM120,000 | RM180,000 | RM400,000 | RM280,000 | RM220,000 |
How to claim: Elect in your CKHT return. A valuation report showing the market value at 1 January 2000 is required.
Practical note: For citizens and PRs, properties acquired before 2000 almost certainly have a holding period exceeding 5 years (25+ years by 2026), making the rate 0% anyway. This exemption is most useful for companies (which pay 10% regardless of holding period beyond year 5) and foreigners (who also pay 10% after year 5).
Exemption 7: Disposal by Government or State Authority
Who qualifies: Federal government, state governments, state authorities, and local authorities.
What it does: Full exemption from RPGT.
This is not relevant for individual investors but is listed for completeness. Government land disposals are exempt.
Exemption 8: Compulsory Acquisition
Who qualifies: Any person whose property is compulsorily acquired by the government under the Land Acquisition Act 1960.
What it does: The compulsory acquisition is not treated as a disposal for RPGT purposes. No RPGT is payable.
If the government acquires your land for infrastructure (highway, railway, public facilities), you receive compensation but do not pay RPGT on any gain.
Eligibility Comparison by Category
| Exemption | Citizen | PR | Company | Foreigner (Individual) |
|---|---|---|---|---|
| Once-in-lifetime private residence | Yes | Yes | No | No |
| Automatic 10% / RM10K | Yes | Yes | No | Yes (all individuals) |
| Spousal transfer (no gain, no loss) | Yes (donor must be citizen) | Yes (donor must be citizen) | N/A | No (donor must be citizen) |
| Gift to family (no gain, no loss) | Yes (donor must be citizen) | Yes (donor must be citizen) | No | No (donor must be citizen) |
| 0% rate after year 5 | Yes | Yes | No (10%) | No (10%) |
| Market value at 1 Jan 2000 election | Yes | Yes | Yes | Yes |
| Compulsory acquisition | Yes | Yes | Yes | Yes |
Companies have the least favorable exemption profile — no automatic exemption, no once-in-lifetime, and a 10% floor from year 6. Foreign individuals do get the RM10K/10% automatic exemption but cannot claim once-in-lifetime relief and their rate floors at 10%. For companies, RPGT planning focuses on maximizing the acquisition price through allowable deductions rather than rate exemptions.
How to Maximize Your Exemptions: Strategic Planning
For Malaysian Citizens/PRs
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Hold for 6+ years. The 0% rate after year 5 is the simplest and most effective strategy. For investment properties, plan your exit timeline around this threshold.
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Save the once-in-lifetime exemption for the biggest gain. If you sell a property with a RM30,000 gain in year 3, it may be tempting to use the once-in-lifetime exemption to avoid the 30% rate (RM9,000 tax). But if you plan to sell your family home later with a RM500,000 gain, that exemption would save RM150,000. Patience pays.
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Use the automatic 10%/RM10K on every disposal. This is free and automatic — just ensure your CKHT return is correctly filed.
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Transfer to spouse before selling (if applicable). If one spouse has already used their once-in-lifetime exemption but the other has not, transfer the property to the other spouse (no gain, no loss), then have that spouse sell and claim the once-in-lifetime exemption. This requires the property to be the private residence of the claiming spouse.
For Companies
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Maximize acquisition price. Include all allowable costs — stamp duty, legal fees, renovation, agent commission — in the acquisition price to reduce the chargeable gain.
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Consider the 2000 market value election. For properties held since before 2000, this can significantly reduce the gain.
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Evaluate whether holding through a company is still optimal. Companies pay 10% RPGT from year 6 onward — citizens pay 0%. If a company holds investment property that has appreciated significantly, it may be worth considering the tax implications of the corporate structure.
For Foreigners
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Hold for 6+ years. The rate drops from 30% to 10%. On a RM300,000 gain, that is the difference between RM90,000 and RM30,000 in tax.
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Maximize the acquisition price. Every ringgit added to the acquisition price (through allowable costs) reduces the chargeable gain by the same amount.
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Consider timing. If you are close to the year 5/6 boundary, delaying the sale by a few months can save 20 percentage points in RPGT.
Claiming Exemptions: Forms and Deadlines
| Exemption | Form Required | Deadline |
|---|---|---|
| Once-in-lifetime | Declaration in CKHT 1A + Form CKHT 502 | Within 60 days of disposal |
| Automatic 10%/RM10K | Automatic via CKHT 1A | Within 60 days of disposal |
| Spousal transfer | CKHT 1A with no gain, no loss declaration + marriage certificate | Within 60 days of transfer |
| Family gift | CKHT 1A with no gain, no loss declaration + relationship proof | Within 60 days of transfer |
| 2000 market value election | CKHT 1A + valuation report | Within 60 days of disposal |
The 60-day filing deadline from the disposal date is strict. Late filing attracts penalties. Do not wait until the deadline — file as soon as your lawyer has the completed SPA.
Common Mistakes
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Assuming all family transfers are exempt. Only transfers between spouses, parents-children, and grandparents-grandchildren qualify. Transfers between siblings are taxable at market value.
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Claiming the once-in-lifetime exemption on a rental property. The property must be your private residence. A property you have rented out continuously does not qualify unless you also resided in it.
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Forgetting to file CKHT returns for exempt disposals. Even if no RPGT is payable, you must still file the return within 60 days. Failure to file is an offense.
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Companies claiming citizen exemptions. The once-in-lifetime and automatic 10%/RM10K exemptions are for individuals (citizens and PRs) only. Companies cannot claim them.
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Not attaching the valuation report for 2000 market value claims. Without a formal valuation, LHDN will reject the election and use the original purchase price.
Sources
- LHDN — RPGT Exemptions (Schedule 4, RPGTA 1976)
- LHDN — RPGT Rates (Schedule 5, RPGTA 1976)
- LHDN — Disposal Price Deemed Equal to Acquisition Price (no-gain-no-loss rules)
- LHDN — RPGT Forms
- Real Property Gains Tax Act 1976
- EY Malaysia — Stamp Duty Exemption for Transfer on Grounds of Love and Affection