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Real property gains tax exemption on the disposal of low-cost, medium-low and affordable residential homes
The Real Property Gains Tax (Exemption) Order 2018 [P.U.(A) 360], gazetted on 28 December 2018, provides that a Malaysian citizen individual is exempted from real property gains tax (RPGT) on the chargeable gain derived from the disposal of a chargeable asset, other than shares, from 1 January 2019 (see Tax Alert No. 1/2019). This Order will apply only if:
(a) The disposal of the chargeable asset is made in the 6th year after the acquisition date of the chargeable asset, or any year thereafter; and
(b) The disposal consideration of the chargeable asset is not more than RM200,000.
Following the above, Real Property Gains Tax (Exemption) 2018 (Amendment) Order 2021 [P.U.(A) 48] was gazetted on 9 February 2021. The Amendment Order provides that in addition to point (a) above, the exemption will now apply only if:
(i) The disposal consideration or market value, whichever is the higher, of the chargeable asset is not more than RM200,000; and
(ii) The total consideration or market value, whichever is the higher, of the chargeable asset as a whole is not more than RM200,000.
You would note that the Amendment Order tightens the qualifying conditions for the RPGT exemption. Based on the Amendment Order, where part of a chargeable asset is disposed, RPGT exemption will not be available unless the market value of the whole chargeable asset (and not just the part disposed) is RM200,000 or less.