Key Takeaways
- Zero RPGT on industrial property after 5 years: Since 1 January 2022, disposers under Part I of Schedule 5 of the Real Property Gains Tax Act 1976 (individuals) pay 0% RPGT when selling any commercial or industrial property held for five years or more. This exemption is permanent and applies to all factories, warehouses, and industrial land in Malaysia.
- Residential sector faces a different tax burden: Foreign buyers now pay a flat 8% stamp duty on residential property transfers from 1 January 2026 (up from 4%). Industrial properties are not affected by this increase, making the industrial segment more attractive for both local and international investors.
- Rental yields are trending up: With reduced capital gains tax incentives, more investors are pivoting to industrial assets for steady rental income. Standard detached factories in Klang Valley command RM1.80–RM2.50 psf built-up, while premium green-certified units reach RM2.20–RM3.00 psf built-up.
- Location still matters: Factories in Klang, Shah Alam, and Kapar benefit from direct highway links (KESAS, NKVE, LKSA, Federal Highway) and proximity to Port Klang – Malaysia’s busiest port. These areas remain top choices for manufacturing and logistics.
- Group transfers can be tax-free: Under certain conditions, transferring properties between companies in the same group can be done on a “no gain, no loss” basis, leading to a full RPGT exemption – a useful tool for corporate restructuring.
What Happened: RPGT Exemption for Industrial Property Is Permanent (Since 2022)
The Real Property Gains Tax (RPGT) regime in Malaysia has seen several shifts over the past decade. The most significant change for industrial property owners came into effect on 1 January 2022. On that date, the government removed the 5% RPGT that was previously charged on disposals after the fifth year of holding. From 2022 onward, individuals (Part I of Schedule 5 of RPGTA) who dispose of a chargeable asset – including factories, warehouses, and industrial land – after five years pay 0% RPGT.
What does this mean for you?
- If you bought a factory in Klang in 2017, held it for five years, and sold it in 2022 or later, you owe zero capital gains tax on the profit.
- If you buy a factory today and hold it for at least five years, you are guaranteed 0% RPGT on the sale.
- This exemption applies to all industrial and commercial properties – not just factories. Warehouses, shop lots, and office buildings also qualify.
What about companies and foreign entities?
Disposers under Parts II and III of Schedule 5 (companies, LLPs, trusts, cooperatives, and non-citizens) are still subject to RPGT after five years. The rates for these categories remain unchanged. For companies, the tax is 10% after the fifth year (reduced from 15% in the fourth year). However, effective from 1 January 2024, gains from the disposal of shares in real property companies (RPCs) by companies, LLPs, trust bodies, and cooperatives are taxed under the new Capital Gains Tax (CGT) regime instead of RPGT. This makes the overall landscape more complex for corporate investors – but the after-five-year exemption for individuals remains a powerful incentive.
Foreign buyer stamp duty doubles – but only on residential
In Budget 2026, the government doubled the stamp duty on residential property transfers for foreign buyers from 4% to a flat 8%, effective 1 January 2026. This applies to all non-citizens and foreign companies purchasing residential properties anywhere in Malaysia.
Critically, this 8% stamp duty does NOT apply to industrial or commercial properties. Foreign investors buying a factory in Klang or Shah Alam will still pay the standard 3–4% stamp duty based on the property value bracket (for non-citizens). This differential creates a clear investment advantage for the industrial segment.
Impact on Factory & Warehouse Owners in Klang, Shah Alam, and Kapar
1. Holding period becomes your best friend
The after-five-year RPGT exemption rewards patient investors. If you own a factory in Klang (e.g., Sungai Renggam Industrial Park, Bukit Raja Industrial Estate) or Shah Alam (Section 24, 31, HICOM Industrial Park), holding for just five years wipes out the capital gains tax entirely. This compares favourably to residential property, where even after five years, individual sellers still pay 0% (but the 8% foreign stamp duty reduces the buyer pool).
2. Rental income becomes more attractive
With zero RPGT on long-term holds, many investors are choosing to lease rather than sell immediately. The result: industrial rental yields are rising. According to current market reality for 2026, standard detached factories in the Klang Valley command:
- RM1.80 – RM2.50 per sq ft built-up for typical semi-D/detached units
- RM2.20 – RM3.00 per sq ft built-up for premium new projects with good building specifications
- Older or lower-spec units are still available at RM1.50–RM1.80 per sq ft built-up, but this range is less common
For comparison, for sale prices, detached factories typically range from RM350 to RM700 per sq ft built-up, while industrial land sells between RM50 to RM200 per sq ft land.
Important note: These are general market observations. For the exact current quotes in your preferred location, contact our team at 016-666 6872.
3. Shift in investor focus from residential to industrial
With residential foreign buyers facing a steep 8% stamp duty, many are reallocating capital into industrial assets. The Johor-Singapore Special Economic Zone (JS-SEZ) and the Rapid Transit System (RTS) Link have further boosted interest in industrial properties across Johor and the Klang Valley. Property experts note that both the residential and industrial segments delivered a strong performance in 2025, with positive momentum expected to continue into 2026.
4. Corporate restructuring opportunities
If you own factory assets through a company, you may be able to transfer them to another company in the same group on a “no gain, no loss” basis, which triggers a full RPGT exemption. This is particularly useful for holding companies or family groups looking to consolidate their industrial portfolio without tax liability.
What to Do Now: Strategies for Factory Investors
🏭 Option 1: Buy and hold for >5 years to enjoy 0% RPGT
If you are considering buying a factory in Klang 2026, your strategy should be clear: plan to hold for at least five years. This ensures:
- Zero capital gains tax on any appreciation
- Immediate rental income (average yield 5–7% based on current rental rates)
- Freedom to time your exit without RPGT pressure
Browse current listings: factory for sale in Klang | factory for rent in Shah Alam
🏭 Option 2: Focus on locations with infrastructure catalysts
Shah Alam – direct access to NKVE, LKSA, and KESAS highways; proximity to Port Klang; mature industrial parks like Seksyen 24, 26, 31, and HICOM.
Klang – Bukit Raja, Port Klang Free Zone, Kapar – all within 15–30 minutes of Westport and Northport; KESAS and Federal Highway connections.
Kapar – emerging industrial area with lower land costs; close to Kapar Power Plant and expanding logistics hubs; factory for rent in Kapar
🏭 Option 3: Consider industrial land for long-term appreciation
Industrial land in Selangor is appreciating steadily. With RPGT exemption after five years, buying land and holding for development or resale can be highly tax-efficient. Current land prices range RM50–RM200 psf depending on location and infrastructure. See: industrial land for sale Selangor
🏭 Option 4: Optimise your corporate structure
If you are a company or LLP, consult a tax advisor about the Capital Gains Tax (CGT) regime introduced in 2024 for share disposals. For factory assets held directly, the 10% RPGT rate after five years (for companies) is still lower than many other jurisdictions. Group restructuring exemptions can also reduce your tax burden.
Market Outlook for 2026 and Beyond
According to property experts surveyed in the January 2026 issue of The Edge Malaysia, the real estate sector – particularly the industrial segment – is expected to maintain strong momentum. Key factors:
- Positive economic fundamentals: Malaysia’s GDP growth, trade volumes, and FDI inflows remain healthy. According to MIDA, approved manufacturing investments continued to rise in 2025.
- Infrastructure megaprojects: The JOhor-SEQR SEZ and RTS Link are driving demand for logistics and manufacturing space. Even though data centre growth has slowed temporarily, conventional factory demand remains robust.
- RPGT advantage over residential: The 8% foreign stamp duty on residential properties will push more cross-border investors into industrial assets, especially in Klang and Shah Alam.
- Rental yield improvement: As capital gains tax incentives are reduced (zero RPGT after 5 years), more investors choose to hold and lease, pushing rental yields higher. The net effect is a healthier market for both buyers and sellers.
Frequently Asked Questions
What is the RPGT exemption for industrial property in Malaysia 2026?
Since 1 January 2022, individuals (Part I of Schedule 5 of the RPGTA) who dispose of a chargeable asset – including industrial property – after five years from the date of acquisition are exempt from RPGT. This exemption remains in force for 2026 and beyond. There is no plan to reverse it. The key condition: the property must be held for at least five full years.
How to avoid RPGT on factory sale in Malaysia?
The most straightforward way is to hold the factory for five years or more before selling. For individuals, this results in 0% RPGT. For companies, the rate drops to 10% after five years (down from 15% in the fourth year). Other exemptions include:
- RM10,000 or 10% of chargeable gain (whichever is greater) – automatic deduction for each disposal.
- Transfers within immediate family – fully exempt if husband/wife, parent/child, grandparent/grandchild.
- One-time lifetime exemption for residential property (not applicable to factories).
- Group restructuring exemption – no gain/no loss transfer between companies in the same group.
Is there RPGT after 5 years in Malaysia?
For individuals (Part I of Schedule 5): No – 0% RPGT applies for disposals after five years from the date of acquisition, effective 1 January 2022.
For companies and other entities (Parts II & III): Yes – RPGT is charged at 10% for disposals after the fifth year (down from 15% in the fourth year, 20% in the third year, etc.). However, note that from 1 January 2024, gains from shares in real property companies are taxed under the new Capital Gains Tax (CGT) regime, not RPGT.
Do foreign buyers pay the 8% stamp duty on industrial properties?
No. The 8% stamp duty introduced in Budget 2026 applies only to residential property transfers for non-citizens and foreign companies. Industrial and commercial properties are exempt from this increase. Foreign buyers purchasing a factory in Klang will continue to pay the standard stamp duty rates (typically 3–4% depending on the property value).
What are the current rental rates for factories in Klang Valley?
As of 2026, standard detached and semi-D factories in Klang, Shah Alam, and Kapar typically rent for RM1.80–RM2.50 per sq ft built-up. Premium, newer units with better infrastructure reach RM2.20–RM3.00 per sq ft built-up. Older or lower-spec units are available from RM1.50–RM1.80 per sq ft built-up but are less common. For exact rates, contact factoryhub.my at 016-666 6872.
Where can I find the latest RPGT rates in Malaysia?
The official source is the Inland Revenue Board of Malaysia (LHDN). Visit hasil.gov.my for the Real Property Gains Tax Act 1976, current rates, and exemption orders. You can also refer to the JPPH Property Market Report for transaction data and MIDA for investment incentives.
How does the RPGT exemption affect rental yields?
With zero RPGT on long-term holds, investors are less compelled to sell quickly. More landlords enter the rental market, increasing supply initially, but also stabilising and gradually pushing rents upward as demand from manufacturers and logistics operators remains strong. According to market observers, rental yields across industrial assets in Selangor are showing an upward trend as capital gains tax incentives are reduced.
Your Next Step: Find the Right Factory Investment
The RPGT exemption after five years, combined with the residential stamp duty hike, makes now an ideal time to invest in a factory in Klang. Whether you are a local businessman looking to own your manufacturing facility or a foreign investor diversifying into industrial property, the tax advantages are clear.
Start your search:
| Location |
Typical Built-Up Price (psf BU) |
Typical Land Price (psf land) |
Key Highway Access |
Distance to Port Klang |
| Klang (Bukit Raja) |
Market rates – contact us |
Market rates – contact us |
KESAS, NKVE, Federal |
10–15 minutes via KESAS |
| Shah Alam (Section 24) |
Market rates – contact us |
Market rates – contact us |
NKVE, LKSA, KESAS |
20–25 minutes |
| Kapar |
Market rates – contact us |
Market rates – contact us |
LKSA, Kapar Road |
25–35 minutes |
| Meru |
Market rates – contact us |
Market rates – contact us |
KESAS, Jalan Meru |
15–20 minutes |
Note: All prices vary by building specification, lot size, and exact location. Contact 016-666 6872 for current market quotes from our verified listings.
Why factoryhub.my?
We are Malaysia’s leading industrial property platform, featuring thousands of verified factory and land listings across Klang, Shah Alam, Kapar, and beyond. Our team provides expert advice on RPGT, stamp duty, and investment strategy tailored to your needs.
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