Myth Buster

Scenario

For the past few years, I have been keeping track of the national budget announcement to see the latest revision of the tax rate for Real Property Gain Tax (RPGT) as an avid investor to real estate. I assume that the tax rate applicable would be the one that was in place when I bought the real estate. This way, I can compute my potential gain better.

Mythbusted.

The applicable rate of RPGT in Malaysia is actually the applicable rate at the material time of the disposal. In another words, it’s the latest rate when you sell it and NOT when you bought it.

The effective date of disposal is taken to be the date of the Sale and Purchase Agreement or the unconditional date of the same if the agreement is subject to the authorities’ approval. From the practice of the past few years, the effective date would be the 1 January of the subsequent calendar year that is consistent with the definition of the year of assessment as defined in the RPGT Act.

Therefore, it is a risk that real estate investor need to factor in to consider the feasibility of the specific real estate investment.

So, how much did you know about this Legal Myth?

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