Real Property Gains Tax Malaysia: RPGT When You Sell a Factory or Industrial Land

Key Takeaways

• Real property gains tax (RPGT) is charged on the gain when you sell a factory, warehouse or industrial land in Malaysia, at a rate set by who you are and how long you held it.
• A Malaysian company pays 30% if it sells within 3 years, 20% in the 4th year, 15% in the 5th year and 10% from the 6th year onwards; a Malaysian citizen or permanent resident pays nothing from the 6th year.
• Foreign individuals and companies not incorporated in Malaysia pay 30% for the first 5 years and 10% from the 6th year.
• The buyer must retain 3%, 5% or 7% of the price and pay it to HASiL within 60 days; the seller files Form CKHT 1A on e-CKHT within 60 days and pays any balance within 90 days.
• The holding period runs from the date of the sale and purchase agreement you signed to buy, to the date of the agreement you sign to sell.

This guide explains RPGT for owners selling a factory or industrial land. It is general information from the Inland Revenue Board (HASiL), not tax advice: ask a tax adviser or your lawyer about your own sale.

What is real property gains tax in Malaysia?

RPGT is a tax under the Real Property Gains Tax Act 1976 on the chargeable gain from disposing of real property, such as land and buildings, and on shares in a real property company. When you sell a factory for more than you paid, after allowed costs, the difference is the chargeable gain and RPGT is charged on it.

If you sell at a loss, there is no tax, and the allowable loss can be set against gains on other disposals in the same year of assessment, then carried forward for up to 9 years of assessment (HASiL).

What are the RPGT rates for selling a factory?

HASiL groups sellers into three categories under Schedule 5 of the Act (RPGT rates):

Most factories in Selangor are owned through a Sdn Bhd, so the Part II column is the one most owners use. A company that has held a factory for more than five years still pays 10% on the gain. An individual citizen who holds the factory in their own name pays nothing from the 6th year, which is one reason the holding structure matters when you buy.

When does the holding period start and end?

The disposal date is the date of the written sale and purchase agreement, or the completion date if there is no written agreement. The buyer's acquisition date is the same date (HASiL). So the clock runs from the date you signed to buy to the date you sign to sell, not from the date you received the keys or the title.

How is the chargeable gain worked out?

The chargeable gain is the disposal price less the acquisition price (HASiL).

The disposal price is the sale consideration less allowable expenses:

1. Money spent after you bought the property to enhance or preserve its value, as it stands when you sell. HASiL's own example is the cost of enlarging a warehouse for a business.
2. Money spent establishing, preserving or defending your title, such as legal fees to defend ownership.
3. Incidental costs of the sale: fees, commissions and remuneration for a surveyor, valuer, accountant, agent or legal adviser.

Keep invoices and approvals for any extension, mezzanine or major repair. Without records, HASiL may not allow the cost.

A worked example (for illustration only)

A Sdn Bhd buys a factory for RM3,000,000 and sells it seven years later for RM4,000,000. It spent RM200,000 on an approved extension and RM60,000 on legal and agent fees for the sale.

• Disposal price: RM4,000,000 less RM260,000 = RM3,740,000
• Chargeable gain: RM3,740,000 less RM3,000,000 = RM740,000
• RPGT at 10% (company, 6th year onwards): RM74,000

The figures are made up to show the method. Your acquisition costs, allowable expenses and dates decide the real number.

Is there any exemption for individuals?

Individuals get an exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, under paragraph 2 of Schedule 4 (HASiL exemptions). The once-in-a-lifetime exemption under section 8 applies only to a private residence, so it does not help with a factory.

How much does the buyer retain, and why?

When the price is paid in money, the buyer must retain part of it and remit it to HASiL within 60 days after the disposal date (retention and remittance):

From disposals in the 2026 year of assessment, the buyer can instead remit an amount equal to the seller's deemed tax, if the seller notifies it before the remittance, whichever is lower. If the buyer fails to pay, HASiL adds 10% of the unpaid amount and treats it as the buyer's debt. In practice the buyer's lawyer holds this sum from the purchase price, so a seller should expect to receive the balance less the retention.

How do you file and pay RPGT?

Since 1 January 2025 RPGT runs on self-assessment (CKHT self-assessment):

1. The seller submits Form CKHT 1A (real property) online through e-CKHT on MyTax within 60 days of the disposal date, and works out the tax in the form.
2. The buyer submits Form CKHT 2A and remits the retention sum within 60 days.
3. The seller pays the tax, or the balance after the buyer's remittance, within 90 days of the disposal date.
4. Keep the documents for 7 years. The return you submit is treated as the assessment.

Paper forms are no longer accepted from 1 January 2025 (responsibilities). If a sale makes no gain or is exempt, the seller files Form CKHT 3 instead.

What are the penalties?

Failing to file CKHT 1A within 60 days, or not declaring a disposal, can bring a penalty of up to 3 times the tax. An incorrect return can bring a penalty equal to the tax under-declared (penalties).

What if you sell the company that owns the factory?

Many factories sit inside a company that owns little else. Shares in such a real property company (RPC), where real property makes up at least 75% of total tangible assets, are treated as chargeable assets under RPGT (HASiL on RPC shares). Since 1 January 2024, RPC share disposals by a company, limited liability partnership, trust body or cooperative fall under the capital gains tax in the Income Tax Act instead of RPGT. Individuals selling RPC shares still file Form CKHT 1B. Selling shares rather than the factory also changes stamp duty and due diligence, so plan it with your tax adviser and lawyer.

What should a factory seller prepare?

• The sale and purchase agreement you signed when you bought, to prove the acquisition date and price.
• Invoices, approvals and payment records for extensions, mezzanines and major works.
• The agent's, valuer's and lawyer's invoices for the sale.
• Your MyTax access for the company, so the CKHT 1A can be filed on time.
• A view of the net proceeds after RPGT, the buyer's retention, the loan redemption and legal fees. Our legal fees and stamp duty calculator helps with the costs side, and what your factory is worth explains how buyers price it.

If you are planning a sale, see how we market factories on our sell your factory page, and check recent registered prices on industrial transactions.

Frequently Asked Questions

How much is real property gains tax in Malaysia for a company?

A company incorporated in Malaysia pays 30% on the chargeable gain if it sells within 3 years, 20% in the 4th year, 15% in the 5th year and 10% from the 6th year onwards. The rates come from Part II of Schedule 5 of the Real Property Gains Tax Act 1976, as published by HASiL.

Do I pay RPGT if I sell my factory after 5 years?

It depends on who owns it. A Malaysian citizen or permanent resident pays 0% from the 6th year. A Malaysian company pays 10%, and a foreigner or foreign company also pays 10% from the 6th year.

Who is exempted from RPGT?

Individuals get an exemption of RM10,000 or 10% of the chargeable gain, whichever is greater. A citizen or PR can also claim a once-in-a-lifetime exemption on a private residence, but not on a factory. Sales at no gain, losses and disposals covered by specific exemption orders are reported on Form CKHT 3.

How much does the buyer hold back for RPGT?

The buyer retains 3% of the price for a citizen or PR seller, 5% for a Malaysian company selling within 3 years, 3% for a company from the 4th year, and 7% for a foreign seller, and remits it to HASiL within 60 days.

When must I file the RPGT form?

The seller files Form CKHT 1A online through e-CKHT on MyTax within 60 days of the sale and purchase agreement date, and pays any tax balance within 90 days. Late or missing filing can bring a penalty of up to 3 times the tax.

Can renovation costs be deducted from RPGT?

Yes, if the work enhanced or preserved the value of the factory and is still reflected when you sell, such as an approved extension. Keep invoices and approvals. Routine maintenance does not count.

FactoryHub is dedicated to helping every client find the right factory or warehouse. To discuss selling your factory, contact Peter Tan (REN 12771) at 016-666 6872.