RPGT Malaysia 2025: A Guide for Foreign and Local Property Owners 1

RPGT in Malaysia 2025: Rules, Rates, and Foreign Investor Impact

All property transactions in Malaysia — whether sales, transfers, or assignments — are subject to Real Property Gains Tax (RPGT). The Inland Revenue Board (LHDN) requires both the seller (disposer) and the buyer (acquirer) to report the transaction within 60 days via the MyTax portal.

For foreign buyers eyeing Kuala Lumpur’s luxury condos or long-term investors in Malaysia, understanding RPGT is essential. Failure to comply can lead to heavy penalties, while proper planning can help optimise returns.

RPGT Basics

RPGT is a capital gains tax on profits from selling property. While most capital gains in Malaysia are untaxed, property gains are taxed to:

Reporting Requirements

Both seller and buyer must file RPGT returns within 60 days of transaction.
Applies to sales, transfers, assignments, or ownership transfers.
Filing must be done through MyTax (www.hasil.gov.my).

Penalties for non-compliance:

Late filing: penalty under Section 29(3) of RPGT Act.
Failure to file: fine up to RM5,000, 12 months jail, or both.

RPGT Rates: Malaysians vs Foreigners

RPGT rates vary by holding period (how long you own the property) and your status (Malaysian, company, foreigner).

Holding Period	Malaysian Citizens & PR	Companies	Foreigners (Individuals & Companies)
≤ 3 years	30%	30%	30%
4th year	20%	20%	30%
5th year	15%	15%	30%
≥ 6th year	0%	10%	10%

Key takeaways for foreigners:

First 5 years: Always taxed at 30%, regardless of how long you’ve held the property.
6th year onwards: Tax drops to 10% (not zero, unlike Malaysians).
Applies equally to foreign individuals and foreign-owned companies.

Why Malaysia Imposes Higher RPGT on Foreigners

The government’s aim is to:

Discourage short-term speculation by foreign investors.
Ensure foreign participation benefits the market long-term.
Protect affordability for locals while still welcoming serious investors.

This means foreign buyers should approach KL property as a medium- to long-term investment rather than a quick flip.

Exemptions and Reliefs

Some exemptions apply equally to locals and foreigners:

Transfers between family members (spouses, parents and children, grandparents and grandchildren).
Inheritance transfers.
Once-in-a-lifetime exemption for Malaysians disposing of a private residence (not available to foreigners).

Foreign buyers should consult tax specialists to confirm eligibility and structure deals efficiently.

RPGT and KL Property Investment

For foreign buyers, RPGT shapes both investment horizon and return strategy.

1. Luxury Segment in KLCC & Mont Kiara

These areas are magnets for foreign investors. RPGT ensures buyers here are committed long-term, reinforcing KL’s image as a stable, mature luxury market compared to fast-flip hotspots elsewhere.

2. Transit-Oriented Developments (TODs)

Projects near MRT, LRT, or the future MRT3 Circle Line offer strong rental yields. Holding for 6+ years allows foreigners to reduce RPGT to 10%, while benefiting from capital appreciation driven by infrastructure.

3. Rental Market Advantage

Foreigners focusing on rental yield rather than quick sales can still achieve strong returns, especially in expatriate-friendly areas (Bangsar South, TRX, KL Sentral). RPGT becomes less of a burden when income is rental-driven.

4. Property Market Stability

By discouraging speculation, RPGT contributes to price stability in KL. For serious long-term investors, this makes the market more predictable and secure.

Example Calculations

Case A: Malaysian Seller

Bought condo for RM1,000,000 in 2020.
Sold for RM1,400,000 in 2025 (5 years later).
Gain: RM400,000.
RPGT: 15% = RM60,000.

Case B: Foreigner Seller

Same scenario: Bought for RM1,000,000, sold for RM1,400,000 in 2025.
RPGT: 30% = RM120,000 (double the Malaysian rate).

Case C: Foreigner with Long-Term Hold

Bought in 2018 for RM1,000,000.
Sold in 2025 for RM1,500,000 (7 years later).
Gain: RM500,000.
RPGT: 10% = RM50,000.

Clearly, foreigners benefit by holding properties longer.

Investor Strategies for Foreign Buyers

Think Long-Term: Hold properties 6+ years to reduce RPGT to 10%.
Focus on Rental Yield: Choose KLCC, Mont Kiara, and Bangsar areas with strong expat rental demand.
Leverage Infrastructure Projects: Buy near MRT3, TRX, or Merdeka 118 precincts for appreciation.
Use Professional Structuring: Foreign-owned companies may explore tax planning options under double-tax treaties.

Conclusion

RPGT is an integral part of Malaysia’s property market, designed to balance government revenue, market stability, and affordability. Both Malaysians and foreigners must report transactions within 60 days to LHDN via the MyTax portal, or risk fines and prosecution.

For foreigners, RPGT rates are higher — 30% in the first five years, 10% thereafter — but this should be viewed as an incentive to treat KL property as a long-term investment.

With Kuala Lumpur offering a mix of luxury residences, transit-linked projects, and global business hubs, serious foreign investors who plan carefully around RPGT can still enjoy solid returns, rental income, and capital appreciation.

The bottom line: RPGT is not a barrier but a framework for sustainable investment. For those ready to commit to Malaysia’s growth story, KL property remains one of Southeast Asia’s most compelling markets.