Does abolishment of real property gains tax mean that developer in Malaysia pay no tax?

No, the developer still pays tax. They would pay corporate tax.

RPGT only applies to property investments, not property trading. Not many people know this in Malaysia - not even many people at tax office - but if an individual keeps buying and selling properties either as they are trading or developing the properties, they would be subject to income tax and the RPGT waiver would not apply to them.

so if i buy condo and sell for profit i pay no tax but if i buy many condo and sell many for profit then pay tax eh?

Basically yes. It actually depends on your intention. But the number of properties you buy and sell and the frequency of your buying and selling helps the tax authorities decide your intention (they can't go inside your head and find out your intention, ya!).

If you buy one off and sell 10 years later then obviously the intention is investment. If you buy 10 properties and sell them all 4 weeks later the tax authorities will deem that to be trading. Anything in between and your guess is as good as mine. But tax authorities are generally lenient.

Kalai, thanks v much. very helpful

as in USA, people are suggested to only sell their real estate after they have holding for one year and a day. this is to aviod the tax authorities charge a higher tax on the gain from selling the property. this thing also work in malaysia, is just i'm not sure the period to hold your property.

Isaac, this only used to apply for RPGT which is now abolished. Now there's no gains tax so no reason to hold the property for any period of time.

Although RPTG is abolished, some local councils will reject the transaction of properties if you sell too soon after the purchase.

Really? on what grounds?? Does this apply to leasehold property only?

Guys Kalai's stuff he wrote earlier is spot on.

He said "RPGT only applies to property investments, not property trading. Not many people know this in Malaysia - not even many people at tax office - but if an individual keeps buying and selling properties either as they are trading or developing the properties, they would be subject to income tax and the RPGT waiver would not apply to them"

Basically if you buy and sell your properties as a business you pay income tax. If you buy and sell properties as an investment you do not pay any tax (i.e. you would pay RPGT but that is now 0). The difference between business and investment is very subtle and it depends on a lot of factors - how many properties you have, how long you keep them, your intention behind the purchase, etc...

The reason I know this well is because the Malaysian authorities use the exact same system as the UK, and even quote UK cases as examples, and my wife is a tax consultant in the UK. Before I came to Malaysia I spent hours with some of the people at the tax authorities. Most of them couldn't help answer the problem, but one very senior lady did, and she referred me to a Malaysian tax book, and in that Malaysian tax book they were constantly using cases in the UK as examples. We spoke to her again confirming what we understood and she agreed that our understanding was correct.

is RPGT still zero? they haven't changed it back, have they?

They have not changed it back. The change was permanent.

confirmed. it was permanent. no rpgt. such a huge thing but not many locals realise how much this will boost the market over the next few years.

So if I use a private limited company to hold the real estate, would selling the assets be tax under corporate tax?

Jason Han wrote:
So if I use a private limited company to hold the real estate, would selling the assets be tax under corporate tax?

jason, if the company buys only one or two properties via the company, can show that the intention was for the property to be a long-term investment (so it helps if the company holds the property for a while - at least 1 or 2 years) then u would not be liable to corporate tax. so if the company's involvement in property is investment, then RPGT would apply (and RPGT is 0!)

but if the company buys and sell properties regularly, that means the company is trading in properties, which is when it pays corporate tax.

i hope this helps.

This is correct. Please note that there can be a fine line between investment and property trading.

Thanks, noted.

I have the intention to hold the property for a long time.

Jason Han wrote:
Thanks, noted.

I have the intention to hold the property for a long time.

jason, remember, it is the intention that is important. even if u hold it for 3 months but intended to hold it as a long term investment then you pay no tax!

good luck!

Hi I have a question on RPGT, is it apply now? I have a property given through my parent's will and now wish to sell it, will RPGT apply? This property is more then 20 years and less then 100k.