This article is part of Zagdim’s wiki series on Malaysian property. It explains how foreign owners calculate the Real Property Gains Tax (RPGT) owed when selling property in Malaysia, what the buyer’s 7% withholding is, and walks through a full worked example. It is written for owners who are not Malaysian citizens and not permanent residents. For the full process of selling, see Zagdim’s main guide, Selling Property in Malaysia as a Foreigner: Buyers, Process, Taxes, and Repatriating Funds.
Why Is Malaysia’s Property Sale Tax Easy to Get Wrong?
There are three common sources of confusion: applying the 30% rate to the full sale price, treating the buyer’s 7% withholding as the final tax bill, and counting the holding period from the handover date. RPGT is actually charged on the “chargeable gain” after deductible costs; the 7% is an amount the buyer withholds and pays on your behalf, not your final tax; and the holding period is measured from the dates on the two sale and purchase agreements.
The Short Answer: How Much Tax?
A foreign individual seller falls under Part III of Schedule 5 of the RPGT Act (non-citizens and non-permanent residents). If you sell within the first five years of holding, the rate is 30%; from the sixth year onward, it is 10%. These rates have applied since January 1, 2019. Regardless of whether you live in Malaysia, selling property located in Malaysia is taxable on the gain.
The seller is only liable for RPGT. Transfer stamp duty is the buyer’s responsibility; agent commission and legal fees are the seller’s transaction costs and can be deducted from the sale price.
| Holding Period | Foreign Individual (Part III) | Malaysian Citizen (Part I, for comparison) |
|---|---|---|
| Years 1–5 | 30% | Separate rate schedule applies |
| From Year 6 | 10% | Not charged since January 1, 2022 |
A seller who holds MM2H status but not permanent residency still falls under Part III.
How Is the Holding Period Measured?
Where there is a written contract, the disposal date is the signing date of this sale’s Sale and Purchase Agreement (SPA), not the transfer or handover date. The acquisition date is the contract date from when you originally bought the property. If fewer than 5 years have passed between the two dates, the 30% rate applies; once you sign in or after the sixth year, the 10% rate applies.
So if your holding period is close to five years, the signing date itself determines which rate applies. Whether the five-year mark has been passed should be confirmed by a lawyer based on the dates of both agreements.
How Is the Chargeable Gain Calculated?
Chargeable gain = disposal price − acquisition price.
Disposal price = the sale price, minus:
- Expenditure that enhanced or maintained the value of the property and is still reflected in it at the time of sale (for example, renovations)
- Expenditure incurred to establish or defend title to the property
- Fees paid at the time of sale to surveyors, valuers, accountants, agents, and lawyers
Acquisition price = the original purchase price, plus incidental costs paid at the time of purchase (for example, legal fees and stamp duty), minus any compensation received, insurance payouts, and forfeited deposits.
Not deductible: interest on a property loan, and the cost of preparing and filing the RPGT return.
Exemption: individuals can deduct whichever is higher — RM10,000 or 10% of the chargeable gain. The official page states this exemption applies to “individuals” without restricting it to citizens, but practitioners differ on whether a foreign individual can claim it when filing online; this remains unconfirmed and should be verified with a tax agent or the Inland Revenue Board. The once-in-a-lifetime exemption for a private residence under Section 8 is available only to Malaysian citizens and permanent residents; foreign owners cannot use it.
If the sale results in a loss, the loss can be carried forward and offset for up to 9 consecutive assessment years.
What Is the Buyer’s 7% Withholding? What’s New From 2026?
When the seller is a foreign individual, the buyer must withhold part of the purchase price at the time of payment and remit it to the Inland Revenue Board (Lembaga Hasil Dalam Negeri, LHDN) within 60 days of the disposal date, to be credited against your RPGT. Under Section 21B as amended by the Finance Act 2025 (Act 874), the buyer remits whichever is lowest of the following three amounts:
- The full cash portion of the price
- 7% of the total price
- Your “deemed assessment” tax amount — the figure from your own filed return — but this option can only be used if the buyer has received your formal notification before making payment
The third option is a new one, available from January 1, 2026: a seller can notify the buyer of the tax amount by declaration. When there is no chargeable gain or an exemption applies, the seller files Form CKHT 3, and once the buyer receives it through e-CKHT, the withholding can be waived.
If the amount the buyer remits is more than your actual tax liability, the excess is refunded to you through the refund procedure; if it is less, you must pay the shortfall yourself. If the buyer fails to remit within 60 days, the resulting 10% increase is the buyer’s liability.
When Do You File, and When Do You Pay?
Since January 1, 2025, RPGT has moved to a self-assessment system:
| Item | Deadline | Who |
|---|---|---|
| File Form CKHT 1A (or CKHT 3) | Within 60 days of the disposal date | Seller |
| Withhold and remit the withholding amount | Within 60 days of the disposal date | Buyer |
| Pay the tax in full, or any shortfall | Within 90 days of the disposal date | Seller |
- Filing must be done online through e-CKHT on the MyTax portal; paper filings are not accepted. The submitted return itself constitutes the assessment, and no separate notice of assessment is issued.
- A seller without a Malaysian tax number can register through e-Daftar; filing can be delegated to a lawyer or a licensed tax agent. Under the Solicitors’ Remuneration Order 2023, a lawyer’s fee for handling CKHT 1A is RM500.
- From January 1, 2026, the tax can be paid in installments over an amount and period approved by the Inland Revenue Board.
- Related documents must be kept for 7 years.
Failing to file on time, or failing to file at all, can result in a penalty of up to 3 times the tax amount; filing incorrect information carries a penalty of up to 100% of the understated tax. Late payment carries a 10% increase, and the tax authority can pursue civil recovery or impose a travel restriction.
Worked Example: A Kuala Lumpur Condo
Assumptions: a strata-titled condo unit in Kuala Lumpur. Purchased under a contract signed on August 15, 2022, for RM1,200,000; legal fees and stamp duty paid at purchase are assumed to total RM45,250 (based on the actual receipts of that year). Sold under a contract signed on October 9, 2026, for RM1,450,000. The seller is a foreign resident, neither a citizen nor a permanent resident. At the time of sale, agent commission was 3% and legal fees follow the 2023 fee schedule; no renovation expenses were claimed.
| Item | Calculation | RM |
|---|---|---|
| Holding period | August 15, 2022 to October 9, 2026, under 5 years | Rate: 30% |
| Incidental costs of sale | Agent commission 3% × 1,450,000 = 43,500; legal fees 1.25% × 500,000 + 1% × 950,000 = 15,750 | 59,250 |
| Disposal price | 1,450,000 − 59,250 | 1,390,750 |
| Acquisition price | 1,200,000 + 45,250 | 1,245,250 |
| Chargeable gain | 1,390,750 − 1,245,250 | 145,500 |
| Individual exemption | Higher of 10,000 and 14,550 | −14,550 |
| Taxable gain | 130,950 | |
| RPGT (30%) | 130,950 × 30% | 39,285 |
| Buyer’s default withholding (7%) | 7% × 1,450,000 | 101,500 |
| Refunded to seller afterward | 101,500 − 39,285 | 62,215 |
A few notes:
- If you formally notify the buyer of the tax amount before they make payment, the buyer only needs to remit RM39,285, and you don’t have to wait for a refund.
- If the sale were instead signed after August 15, 2027 (from the sixth year onward), the tax would be 130,950 × 10% = RM13,095, a difference of RM26,190. Whether the five-year mark has been passed should be confirmed by a lawyer based on the dates of both agreements.
- If a foreign individual cannot claim the individual exemption, the taxable gain is RM145,500, the 30% tax is RM43,650, and the refund is RM57,850.
- Agent commission and legal fees above exclude service tax; whether it is charged depends on the actual invoice.
This depends on your contract dates, your residency status, and your deductible receipts.
What Other Situations Should You Watch For?
- Classified as a property trading business: RPGT gains do not include profits that are taxable under the Income Tax Act. If your property dealings are classified as business income instead, income tax applies; for non-resident individuals, income tax has been a flat 30% since the 2020 assessment year, with no individual exemption available.
- Budget 2027: The budget was tabled in Parliament on October 9, 2026. Reporting after the tabling showed no change to RPGT rates or the 7% withholding; property-related measures focused on stamp duty relief for citizens’ first home purchases and relief for abandoned housing projects. The provisions are still subject to passage of the Finance Bill and gazettement.
Malaysia Property Sale Tax FAQ
Is the 7% When Selling Property in Malaysia the Foreigner’s Tax Rate?
No. The tax rate for a foreign individual is 30% (years 1–5) or 10% (from year 6 onward), applied to the chargeable gain. The 7% is an amount the buyer withholds from the sale price on your behalf, with any excess refunded and any shortfall payable by you.
If the Owner Sells at a Loss, Does the Buyer Still Withhold 7%?
When there is no chargeable gain, the seller can file Form CKHT 3; once the buyer receives it through e-CKHT, the withholding can be waived. If the buyer has not received it, they must still remit within 60 days.
Can a Foreigner Use Malaysia’s Private Residence Exemption?
No. The once-in-a-lifetime private residence exemption under Section 8 is available only to Malaysian citizens and permanent residents.
Glossary
- Real Property Gains Tax (Cukai Keuntungan Harta Tanah, RPGT): the tax charged on gains from selling property in Malaysia.
- Part III: the seller category under Schedule 5 of the RPGT Act for, among others, individuals who are non-citizens and non-permanent residents.
- Chargeable gain: the amount remaining after subtracting the acquisition price from the disposal price.
- Section 21B retention: the portion of the price the buyer withholds and remits on the seller’s behalf, credited against the seller’s RPGT.
- Deemed assessment: under the self-assessment system, the seller’s filed return is itself treated as the assessment.
- CKHT 1A / CKHT 3: the return for a property disposal; the declaration form used when there is no chargeable gain or an exemption applies.
- e-CKHT / e-Daftar: the online RPGT filing system and tax-number registration service on the MyTax portal.
A Note on Our Data
This article was compiled by Zagdim research. The statutory provisions have been checked against the text of the law (Verified by Zagdim); market practices are marked separately. Data was last checked on October 9, 2026. Tax rates, calculations, and filing procedures follow the Inland Revenue Board’s website and Operational Guideline No. 2 of 2026; the amendment to Section 21B follows the Finance Act 2025 (Act 874), reproduced as an official publication on a third-party website. Whether a foreign individual can claim the RM10,000 / 10% exemption remains unconfirmed. Agent commission and legal fee rates are drawn from practitioner or law firm summaries. The incidental purchase costs used in the worked example are assumed figures and do not represent any actual transaction. Budget 2027 was tabled in Parliament on October 9, 2026; reporting after the tabling showed no related rate changes, though the provisions may still change before the bill passes.
Have a question about this guide? Leave a comment below, or ask Zagdim directly.
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Sources
- Inland Revenue Board of Malaysia – Real Property Gains Tax (RPGT) Rates
- Inland Revenue Board of Malaysia – RPGT Introduction & Basis of Taxation
- Inland Revenue Board of Malaysia – Disposal Date And Acquisition Date
- Inland Revenue Board of Malaysia – Disposal Price And Acquisition Price
- Inland Revenue Board of Malaysia – RPGT Exemption
- Inland Revenue Board of Malaysia – Responsibility Of Disposer And Acquirer
- Inland Revenue Board of Malaysia – Introduction to the CKHT Self-Assessment System
- Inland Revenue Board of Malaysia – CKHT Operational Guideline No. 2 of 2026
- Inland Revenue Board of Malaysia – RPGT Payment Procedure and Refund
- Inland Revenue Board of Malaysia – Imposition Of Penalties And Increases Of Tax
- Inland Revenue Board of Malaysia – Tax and Expatriates
- Malaysian law – Finance Act 2025 (Act 874)
- Conventus Law – The Solicitors’ Remuneration Order 2023
- OpenExamPrep – Standard 4: Estate Agency Fees
- PropCashflow – Subsale Property Process Malaysia
- The Star – Supply Bill 2027 tabled for first reading in Parliament
Important Notice
This article is a general informational summary and does not constitute individual legal or tax advice. Data was last checked on October 9, 2026. Tax rates and procedures may be updated; refer to the Inland Revenue Board of Malaysia’s current announcements, and consult a qualified tax agent or lawyer before filing.
