Real Property Gains Tax (RPGT)

What this real property gains tax guide covers

Real property gains tax, known as RPGT or CKHT, is charged when property is disposed of at a price higher than the acquisition price. It is charged on the gain, not on the sale price.

Real property gains tax rates by holding period

For non-citizen buyers and sellers, see conveyancing for foreign buyers.

How the gain is calculated for real property gains tax

The chargeable gain is the disposal price less the acquisition price less allowable costs.

Allowable costs include the legal fees and stamp duty you paid when you bought the property, agent commission on the sale, and renovation costs that enhanced the value of the property. Ordinary maintenance does not count.

Every claim needs a receipt. That is the practical reason to keep purchase documents years after the matter closes. Without receipts those costs are difficult to claim and the tax payable ends up higher.

The retention sum and how it is released

The solicitors handling the sale are required to withhold part of the sale price and remit it to the Inland Revenue Board. The rate is 3% for citizen and Permanent Resident sellers, and 7% for non-citizens.

The amount withheld is not the actual tax. It is an advance payment, and the balance is released to the seller once the assessment is settled. The retention is one reason a seller needs their own solicitor rather than sharing the buyer’s. See subsale conveyancing for sellers.

If the actual tax is lower than the amount withheld, the excess is refunded, but the refund takes time.

A seller who needs the money quickly has to plan cash flow on the basis that this sum does not arrive on completion day.

The 60 day window to file real property gains tax forms

Form CKHT 1A by the seller and Form CKHT 2A by the buyer must be filed within 60 days of the disposal date. Late filing attracts a penalty.

The disposal date is normally the date of the sale and purchase agreement, not the date the keys change hands. This is frequently misunderstood and it is how the 60 day window gets missed.

Allowable costs and the evidence needed

The gain is computed after deducting allowable costs. These include acquisition costs such as stamp duty and legal fees on the purchase, and disposal costs such as agent commission and legal fees on the sale.

Renovation costs that add value to the property can also be deducted, but they need evidence. Contractor receipts, local authority approvals where relevant, and before and after photographs all help.

Ordinary maintenance such as repainting is not treated as value-adding. The line between maintenance and improvement is often disputed, so keep the documents from the start.

Questions worth asking

What the estimated tax is based on my acquisition and disposal dates.

Which costs are deductible, and what documents I need to prove them.

How much will be held as a retention sum, and when the balance is likely to come back.

What happens if I sell at a loss.

Whether any exemption applies to my situation.

Frequently asked questions about real property gains tax