Sold at the Price You Paid, So No RPGT? A Court of Appeal Case: LHDN Goes by JPPH Market Value, Not Your Contract Price
Not necessarily. In Malaysia, Real Property Gains Tax (RPGT, the tax on profit when you sell property) is not worked out only from the price written in your contract. Whoever the buyer is, if the price is clearly below the market value set by the government Valuation and Property Services Department (JPPH), the Inland Revenue Board (LHDN) can disregard that price under Section 25(2) of the Real Property Gains Tax Act 1976 and use the JPPH value; sales to relatives, ex-spouses or your own company are simply the first to be picked out. The Court of Appeal upheld exactly this against a company called Kayusar: a condo sold at its RM398,000 purchase price was taxed on a market value of about RM600,000.
So a break-even or loss sale escapes RPGT only when the price matches the JPPH market value: if the market has genuinely fallen, the JPPH figure will be low too (you still have to file with LHDN within 60 days). Malaysian citizens and permanent residents who sell after holding for more than five years pay 0% RPGT, so the issue disappears; companies and foreigners never reach 0% and always need to watch it.
How did a RM398,000 condo produce a gain of about RM200,000?
The seller, Kayusar Sdn Bhd, is a timber company. It bought a condo and, some years later, sold it to the ex-wife of one of its directors for exactly what it had paid. It told LHDN: no profit, so no tax.
| Seller's return | LHDN's calculation | |
|---|---|---|
| Purchase price | RM398,000 | RM398,000 |
| Sale price | RM398,000 (contract) | About RM600,000 (JPPH market value) |
| Gain before allowable costs | RM0 | About RM200,000 |
| Outcome | Nothing to pay | RPGT assessed |
The company appealed to the Special Commissioners of Income Tax, then the High Court, then the Court of Appeal, and lost every time. The reasoning was simple:
- The price did not make sense. Several years of ownership, not a ringgit of change in price, and the buyer was connected to a director. That does not look like a normal sale.
- The law gives LHDN the power. Section 25(2) says that where a transaction directly affects whether tax is payable, LHDN may disregard or vary it. A sale between connected persons is treated as if it were at arm's length, meaning a normal market deal.
- The seller has to prove it. If you say the JPPH valuation is wrong, you must bring the evidence. Kayusar did not, so the valuation stood.
How does LHDN know you sold cheap?
Many sellers assume the tax follows whatever the contract says. In fact the government already has a market value for every transfer:
- Stamp duty is charged on market value. When the transfer document (MOT) goes for stamping, JPPH sets the market value; if the contract price is lower, the buyer still pays stamp duty on market value. So selling cheaply to family does not even save stamp duty. See the stamp duty guide.
- The RPGT forms ask about the relationship. The seller files CKHT 1A and the buyer CKHT 2A; both state the price and whether the parties are related.
Put the contract price next to the JPPH value, and a large gap gets picked out for review even when the buyer is a stranger; deals between connected people are checked first.
Which sales can be repriced to market value?
| Your situation | Can LHDN use market value? | Watch out for |
|---|---|---|
| Sold to a stranger at close to the JPPH market value | Normally no | Keep the contracts and purchase and renovation receipts for seven years |
| Sold to a stranger but clearly below the JPPH value (fire sale) | Yes | Who the buyer is matters less than the gap; keep evidence of why you sold fast and your price cuts |
| Market genuinely fell, JPPH value fell too; sold at a loss | No, and no RPGT on a loss | Keep nearby transaction records or a valuation report showing the fall |
| Sold below market to a sibling, relative or friend | Yes | Siblings get no RPGT or stamp duty relief at all |
| Sold to an ex-husband or ex-wife | Yes | After divorce you are no longer spouses; Kayusar's buyer was a director's ex-wife |
| Sold to your own or your family's company, or a company sold to a director, shareholder or their family | Yes | Company RPGT stays at 10% from year 6; it never reaches zero |
| Gifted to a spouse, parent, child, grandparent or grandchild (giver is a citizen) | No tax; treated as no gain, no loss | The receiver inherits your original price and pays when they sell; see transferring property to family |
| Low price in the contract, the difference paid on the side | Yes, and it is false declaration | The consequences go well beyond back tax; do not do it |
Before you sell: how to avoid being repriced
- Get a registered valuer's report first, sell at that value, and keep the report. If LHDN questions the price, this is your evidence; Kayusar lost because it had none.
- If you want to help family, check whether a gift beats a sale. Gifts between spouses, parents and children, and grandparents and grandchildren carry no RPGT for the giver and large stamp duty relief. Siblings are not on that list.
- Check your holding period. For citizens and PRs, RPGT is 20% in year 4, 15% in year 5 and 0% from year 6. A few months can change the bill a lot. Rates: selling property and RPGT 2026.
- File even with zero gain. Submit CKHT 1A on MyTax within 60 days of signing the SPA (sale and purchase agreement). The buyer's lawyer holds back 3% of the price for LHDN, and any excess is refunded.
Our view: LHDN is not chasing people who sell at a loss
In some parts of Malaysia, condos really are selling below their purchase price, especially where supply is heavy. Those sellers, at prices in line with the JPPH value and nearby deals, have nothing to fear from repricing and pay no RPGT.
The trouble is with prices well below the JPPH value, most often in "helping family out" or "left hand to right hand" deals: a price set below market on the assumption that the contract price is the final word. This case is clear: the price has to make sense, and the evidence is yours to produce. A few hundred ringgit on a valuation before you sell is far cheaper than tens of thousands in back tax afterwards.
Frequently asked questions
Do I still have to file with LHDN if I sold at a loss?
Yes. Gain or loss, the seller files CKHT 1A and the buyer CKHT 2A within 60 days of the SPA, online through MyTax since 2025. A loss means no tax, but not filing means a penalty.
Do I get back the 3% the buyer's lawyer holds?
Yes. The 3% goes to LHDN against your RPGT; if the tax works out lower or nil, the excess is refunded. Malaysian citizens selling after five full years do not have it withheld.
How long after the sale can LHDN come back?
In the Kayusar case LHDN came about a year after the sale. Generally LHDN can raise an assessment within five years after the year of disposal, with no time limit for fraud or wilful default. Keep valuations and receipts for at least seven years.
Can a transfer to my spouse be repriced?
A gift to your spouse, where you are a citizen, is treated as no gain and no loss, so no RPGT, and stamp duty is fully exempt. After divorce you are not spouses and this no longer applies.
My property is held by a company. Anything special?
Company RPGT stays at 10% from year 6 and never reaches zero, so a company selling to a director, shareholder or their family should use market value no matter how long it has held. Kayusar was exactly that: a company selling to a director's ex-wife.
Case facts are from the published summary of the Court of Appeal decision in Kayusar Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri (LHDN ReveNews) and a lawyer's public write-up; the tax and penalty amounts are in the judgment and are not quoted here. Rates and filing rules are as of October 2026. This is general information, not tax advice; before selling or transferring to someone connected to you, speak to a property lawyer or tax adviser.
Send us the year you bought, what you paid and the price you have in mind. We will check it against recent nearby transactions to see whether the price holds up, and whether selling or gifting works out better.