Selling & Property Gains Tax
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.
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| 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. |
Before you accept the offer
This post works through a common position for retirees and homemakers selling an inherited property, and it is solvable Selling costs are largely decided before the property is listed, by whether your documents are in order and your accounts are clear.
Why non-earning sellers and retirees find themselves without a tax profile
A substantial proportion of secondary property sellers in Malaysia have never interacted with the tax authorities. Individuals who have spent their careers in non-taxable income brackets, full-time homemakers who held matrimonial homes in their names, and senior citizens who retired before digital filing systems were implemented frequently possess no existing income tax reference number. When disposing of a property, these owners are suddenly informed by their conveyancing lawyers that tax filings are mandatory, creating anxiety that they are in violation of historical tax regulations.
The legal divide between income tax registration and real property gains tax
It is vital to understand that having no active income tax file does not equate to tax wrongdoing. Income tax is governed by the Income Tax Act 1967, which taxes income derived from employment, business, and other recurrent revenue sources. If your historic income fell below the statutory taxable threshold, you had no legal obligation to maintain an active income tax file. Real property gains tax, however, is governed by a distinct statute: the Real Property Gains Tax Act 1976. This Act taxes capital gains arising exclusively from the disposal of chargeable real property assets.
The administrative solution: registering a tax identification with LHDN
Because Lembaga Hasil Dalam Negeri administers both Acts, it requires a registered tax identification profile to process and track any section 13(1) return. Resolving this administrative requirement is straightforward and routine. A seller who lacks a tax file can apply directly to LHDN online through their official portal or in person at any local service branch. By presenting a copy of their identity card (NRIC) and the primary property conveyancing documents, LHDN issues an official tax reference number. This number enables conveyancing solicitors to log the transaction into the tax system.
Deceased estates and inherited property: identifying the chargeable person
When a property owner passes away and the property is subsequently sold, heirs frequently discover that the deceased had no tax file or that their historic tax status is inaccessible. Under the Real Property Gains Tax Act 1976, this scenario is regulated by Schedule 1 paragraph 10, read together with section 50 and section 6(2). These provisions explicitly define who acts as the chargeable person responsible for making the return. In a deceased estate, the legal personal representative—the named executor under a Grant of Probate or the court-appointed administrator under Letters of Administration—assumes statutory liability.
Managing the sixty-day clock while completing tax registration
The crucial challenge in no-tax-file disposals is time management. The statutory sixty-day deadline under section 13(1) runs relentlessly from the date of disposal, whether the seller possesses a tax file or not. If a seller delays registration until late in the conveyancing period, the sixty-day window may expire before the return can be formally lodged. This delay incurs late filing penalties and prevents the purchaser's bank from releasing financing. Sellers without existing tax files must initiate registration within the first fortnight of signing the contract.
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
Many property disposers in Malaysia—particularly retirees, full-time homemakers, and heirs disposing of inherited assets—have never maintained an active income tax file or registered for e-Filing with Lembaga Hasil Dalam Negeri (LHDN). While real property gains tax is governed separately by the Real Property Gains Tax Act 1976 rather than the Income Tax Act 1967, LHDN administers both regimes using an integrated tax identification system. Having no existing tax file does not exempt an individual from their statutory duty under section 13(1) to file an RPGT return within sixty days of the disposal date. The situation is entirely solvable: the disposer simply registers for a tax identification number through LHDN's portal or branch office, enabling their conveyancing solicitor to submit the return and clear the transaction. For deceased estates, Schedule 1 paragraph 10, read with section 50 and section 6(2), establishes that the legal executor or administrator acts as the chargeable person responsible for registering and filing on behalf of the estate.
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| 1 | Confirm whether you possess an existing active tax identification number registered with LHDN. |
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| 2 | Gather your National Registration Identity Card (MyKad) and executed sale contract to register with LHDN. |
| 3 | Apply for a tax identification number via LHDN's online portal or by visiting a branch in the first fortnight. |
| 4 | If selling as an executor or administrator, provide the Grant of Probate or Letters of Administration to LHDN. |
| 5 | Forward your newly assigned tax reference number to your conveyancing solicitor to lodge the section 13(1) return. |
Common questions
Can I be fined by LHDN for past years if I register a tax file only to pay RPGT?
Not simply for registering. If your historic income fell below statutory taxable thresholds under the Income Tax Act 1967, you had no legal obligation to file annual income tax returns. Registering for RPGT does not trigger penalties for non-taxable years.
Does having no income tax file extend the sixty-day section 13(1) RPGT filing deadline?
No. The statutory sixty-day deadline runs strictly from the date of disposal under section 13(1). Administrative steps to register a tax file must be completed within this timeframe to avoid statutory late filing penalties.
Who is responsible for registering a tax file if an inherited property is sold by multiple siblings?
Under Schedule 1 paragraph 10, section 50, and section 6(2), the legally appointed executor or administrator of the deceased estate acts as the chargeable person. If ownership was already transferred to the siblings, each co-owner must submit their own return.
Can my conveyancing lawyer register the tax file on my behalf with LHDN?
Yes. Most conveyancing solicitors can assist clients in submitting registration particulars and documents to LHDN to obtain a tax reference number, provided you supply your identity card and transaction documents promptly.
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.
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.
Lewis Conclusion
Do not leave RPGT paperwork to the final month of completion. Instruct your conveyancing solicitor to draft and verify your section 13(1) returns immediately upon signing the sale and purchase agreement, and ensure all historical acquisition documents and permitted expense receipts are compiled within the first thirty days.
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.
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.
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Confirm whether you possess an existing active tax identification number registered with LHDN.
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Gather your National Registration Identity Card (MyKad) and executed sale contract to register with LHDN.
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Apply for a tax identification number via LHDN's online portal or by visiting a branch in the first fortnight.
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If selling as an executor or administrator, provide the Grant of Probate or Letters of Administration to LHDN.