Acquisition of Property
For any acquisition of property, there will be an acquirer and a disposer. Each of these parties have different roles to play.
Withholding by Acquirer
When a transfer of property or assets in Malaysia is either fully or partially paid in cash, the acquirer is required to withhold the entire cash consideration at a rate of either 3% of the total acquisition price or 7% if the disposer is neither a citizen and nor an incorporated company in Malaysia.
This withheld cash is to be submitted and be applied against the amount of RPGT payable by the disposer.
Payment by Disposer
The disposer is then required to pay the balance of RPGT within 30 days from the date of asset notice.
In certain transactions, the disposal price may be regarded as equal to its acquisition price. Those transactions include the following:
Transfers of assets owned by a citizen between spouses
Gifts sent to the government, an approved charity, or a local authority
Devolution of assets of a deceased individual
Disposal of assets due to mandatory acquisition according to any law
Disposal of chargeable asset pursuant to a scheme of financing approved by any official financial authorities of Malaysia
For other cases, transfer of real property may be regarded as being of neither any net gain nor loss to the disposer. An example of such is the transfer of real property with prior approval of the Director General of Inland Revenue (DGIR) by a company to companies in the same group for the purposes of increasing operational efficiency for a consideration consisting of not less than 75% in shares.
What are Allowable Losses
Allowable losses refer to circumstances which involve the sale of multiple properties during the same tax year. When a seller loses money by selling at a price below the purchase price, the seller can use that loss to offset any profit on another sale made. Allowable losses can be rolled over into future tax years.