Selling & Property Gains Tax
The RPGT clock starts the day you dispose, not the day you get paid
The statutory RPGT filing clock under section 13(1) starts on the exact date of disposal, not when completion takes place or purchase money is received. Understanding the sixty-day filing rule and the section 21B retention mechanism prevents costly penalties and legal complications.
Quick summary
Quick answer
Best for
Risk level
Buyer action
| Best for | Owners selling or transferring a property |
|---|---|
| Risk level | High |
| Buyer action | Send Lewis the property, photographs of the problem with their dates, and what you have already put in writing, and he will tell you what to do next. |
The clock starts at disposal
This post works through both sides of the transaction have a filing duty, and the buyer's lawyer withholds money because of it Real property gains tax is a filing obligation before it is a payment. The duty to submit a return does not wait for you to work out whether any tax is due, and it does not disappear because the answer turns out to be nothing.
The statutory trigger: understanding the exact date of disposal under section 13(1)
Many property sellers operate under the mistaken impression that real property gains tax obligations arise only when the purchaser pays the balance purchase price or when vacant possession is delivered. Section 13(1) of the Real Property Gains Tax Act 1976 establishes an unambiguous statutory deadline: the disposer must submit a return within sixty days of the date of disposal. In legal conveyancing, the date of disposal is the date the formal sale and purchase agreement becomes unconditional. If the contract is unconditional from the start, day one is the date of signing. If the contract requires state authority consent, the clock starts on the date consent is formally granted.
The dual filing obligation: both disposer and acquirer must submit returns
Compliance with the Real Property Gains Tax Act 1976 is not solely the seller's concern. The statute creates parallel filing duties for both sides of the conveyancing transaction. While the disposer reports the disposal price, original acquisition cost, and allowable expenses under section 13(1), the acquirer is equally required by law to file an acquirer's return containing all necessary particulars of the transaction within the exact same sixty-day window. Conveyancing solicitors typically coordinate both filings simultaneously to ensure matching particulars. Failure by either party to file within the statutory sixty days exposes them to statutory penalties and delays clearance.
The section 21B retention mechanism: why the buyer's lawyer holds your funds
Sellers are often surprised when their purchaser's solicitor withholds a portion of the deposit money rather than releasing it immediately. This retention is a mandatory statutory mechanism governed by section 21B of the Act. The acquirer must withhold and remit to the Director General the whole of the money or a sum not exceeding three per cent of the total consideration under section 21B(1), whichever is less. For disposers that are Malaysian companies or bodies disposing within three years of acquisition, section 21B(1A)(a) prescribes a retention not exceeding five per cent. For non-citizens and non-permanent residents, section 21B(1A)(b) sets the retention ceiling at seven per cent.
Retention money is a payment on account, not the final tax assessment
A critical distinction every seller must understand is that the money withheld and remitted under section 21B does not represent your final tax liability. It operates strictly as an advance payment on account remitted to Lembaga Hasil Dalam Negeri (LHDN) to safeguard tax collection. Once LHDN assesses your formal section 13(1) return, the Director General issues a notice of assessment. If your actual tax payable is less than the retention sum remitted, or if you qualify for statutory relief or sold at a loss, LHDN refunds the excess. If actual tax exceeds the retention, the disposer must pay the remaining balance within the specified assessment deadline.
What happens when you miss the sixty-day window and how extensions work
Missing the sixty-day filing window triggers statutory non-compliance penalties under the Act and can stall the entire conveyancing timeline. Banks financing the purchaser often require proof of RPGT filing before releasing loan drawdowns, meaning a missed deadline can cause late completion interest against the seller. Section 13(1) does provide that the return must be made within sixty days 'or such further period as the Director General may allow on a written request being made to him.' However, an extension is discretionary and must be formally requested in writing with substantiated grounds before default occurs.
Check this against your own case
Rates, bands and exemptions move with each Budget, so treat every figure you read anywhere — including here — as needing confirmation before you file. Check the current position with LHDN or your tax agent, and keep the receipts that support whatever you claim.
Buyer checklist
Under section 13(1) of the Real Property Gains Tax Act 1976, the disposer must submit an RPGT return to the Director General within sixty days of the date of disposal, or within such further period as the Director General may allow on written request. The acquirer has an identical statutory obligation to file an acquirer's return within that same sixty-day window. The date of disposal is determined legally by the contract date of an unconditional agreement, or the date of obtaining state consent for conditional contracts, rather than when purchase funds are fully paid out. To secure compliance, section 21B requires the acquirer's solicitor to withhold a statutory retention sum—three per cent under section 21B(1), five per cent under section 21B(1A)(a) for certain corporate disposals within three years, or seven per cent under section 21B(1A)(b) for non-citizens and non-permanent residents—and remit it directly to LHDN within sixty days as an advance payment on account.
1
2
3
4
5
| 1 | Establish the exact legal date of disposal based on whether the sale agreement is unconditional or subject to state consent. |
|---|---|
| 2 | Instruct your conveyancing solicitor to prepare the section 13(1) disposer's return immediately upon signing. |
| 3 | Confirm that the purchaser's solicitor is preparing the parallel acquirer's return within the same sixty-day window. |
| 4 | Verify the correct section 21B retention percentage withheld based on the disposer's residency or corporate classification. |
| 5 | Compile all original acquisition purchase contracts, title documents, and capital improvement receipts for LHDN verification. |
Common questions
Does the sixty-day RPGT deadline start from when the buyer pays the deposit or the full balance?
Neither. Under section 13(1), the sixty days runs from the date of disposal. For an unconditional contract, this is the date the agreement is signed. If the contract is conditional upon state consent, it runs from the date that consent is granted.
Is the retention sum under section 21B my actual final tax liability?
No. The retention sum (three, five, or seven per cent depending on category) is strictly an advance payment on account remitted to LHDN. Your final tax is determined by LHDN's notice of assessment; any excess remitted is refunded.
Can I apply for an extension if I cannot compile my documents within sixty days?
Yes. Section 13(1) allows the Director General to grant a further period upon written request. However, the extension is discretionary, and your solicitor must submit the written request with solid justification before the deadline expires.
Does the buyer have to file an RPGT return if the seller is an individual citizen?
Yes. The law imposes a mandatory filing obligation on both parties. The acquirer must submit an acquirer's return containing transaction particulars within the same sixty-day window regardless of the seller's citizenship.
Lewis Chong
REN 69566 · IQI GlobalProperty advisor helping KL, JB, and Penang buyers make data-backed property decisions.
Related reading
Use one buyer framework across different news.
You sold at a loss - do you still have to file?
Disposing of real property at a financial loss does not extinguish your statutory obligation to file an RPGT return under section 13(1). Formally declaring an allowable loss to LHDN preserves tax relief for future real property gains and secures the return of withheld funds.
Lewis Conclusion
Never assume a loss means zero paperwork. File your section 13(1) return meticulously with all historical purchase invoices and legal fee documentation within the sixty-day deadline to lock in your allowable loss with LHDN and reclaim your section 21B retention refund without delay.
Paying RPGT when you have never had a tax file
Selling real property without an active income tax file is a common hurdle for retirees, homemakers, and heirs. Registering a tax reference with LHDN allows you to fulfill statutory section 13(1) filing duties and complete conveyancing smoothly.
Lewis Conclusion
Do not let the lack of an existing tax file stall your property disposal. Register your tax identification with LHDN immediately upon executing the sale agreement, or ensure your solicitor initiates the profile registration in week one so that your section 13(1) filing meets the statutory sixty-day deadline.
Transferring a property to your child: the RPGT question
Gifting real property to your child without monetary consideration remains a disposal under the Real Property Gains Tax Act 1976. Schedule 2 paragraph 12(2) provides no-gain-no-loss relief for citizen donors, but critically defers the tax liability onto the child rather than erasing it.
Lewis Conclusion
Do not execute a deed of gift to your child thinking you have wiped away real property gains tax forever. Review the parent's historical acquisition price and retain every single original renovation and legal invoice; your child will desperately need those receipts to establish their permitted expenses when they sell decades later.
Prefer Lewis to contact you?
Tell Lewis your budget and area — get a hand-picked 3-project shortlist with price, rental and risk notes on WhatsApp.
Prefer to chat directly? WhatsApp Lewis
Decision check
Want Lewis to apply this to your shortlist?
Send your budget, preferred area, purpose and timeline. Lewis can turn the news into a practical project comparison.
Send
Establish the exact legal date of disposal based on whether the sale agreement is unconditional or subject to state consent.
Send
Instruct your conveyancing solicitor to prepare the section 13(1) disposer's return immediately upon signing.
Send
Confirm that the purchaser's solicitor is preparing the parallel acquirer's return within the same sixty-day window.
Send
Verify the correct section 21B retention percentage withheld based on the disposer's residency or corporate classification.