Selling KL Property as a Foreigner: 30% RPGT, a 10% Floor and 7% Retention
Adrian Wong
Registered Negotiator · REN74052
Foreign buyers spend most of their time on what they must pay to get into Kuala Lumpur property. The cost of getting out gets much less attention, and it can be larger. If you are not a Malaysian citizen or permanent resident, the real property gains tax (RPGT) on a sale in the first five years is the same flat 30% on the gain, and the buyer's lawyer must hold back 7% of the sale price when you sell.
Which rate applies to you
The Inland Revenue Board (LHDN) sorts sellers into three groups under Schedule 5 of the RPGT Act 1976. Part I covers individuals and partnerships other than those in Parts II and III, which includes Malaysian citizens. Part III covers non-citizens who are not permanent residents, their estates, and companies not incorporated in Malaysia.
That wording matters. On the LHDN page, a permanent resident is not placed in Part III, so the foreign rates below are for non-citizens who do not hold PR. An MM2H holder holds a long-stay visa, not PR, so on the plain wording of that page the Part III rates would apply. I would confirm your own status with LHDN or your lawyer before you sell.
The rates, side by side
The table compares the rates LHDN publishes for disposals from 2022 (Part I) and from 2019 (Part III) onward. The Bar Council's Circular 444/2024, dated 23 December 2024, gives the same figures for non-citizens.
| Year of disposal | Citizen (Part I) | Non-citizen, not PR (Part III) |
|---|---|---|
| Years 1 to 3 | 30% | 30% |
| Year 4 | 20% | 30% |
| Year 5 | 15% | 30% |
| Year 6 and after | 0% | 10% |
A citizen's tax disappears after year five. A foreign seller's never does. The Part III rate for year six onward was 5% from 2014 to 2018 and has been 10% since 2019, according to the LHDN table.
A worked example
Take a freehold unit at the RM1,440,000 starting price listed for Core Residence @ TRX, which has a listed completion year of 2024. That is above the RM1,000,000 floor in the federal guideline for foreign purchases that the Bar Council circular reproduces, though each state sets its own threshold, so confirm the current one first.
Now assume, purely as our own illustration, that you sell for 20% more, at RM1,728,000. The gain is RM288,000. I have ignored deductible costs and any exemption, which can lower the tax, so treat the results as upper estimates.
| Sold in | Foreign seller pays | Citizen pays |
|---|---|---|
| Years 1 to 3 | RM86,400 | RM86,400 |
| Year 4 | RM86,400 | RM57,600 |
| Year 5 | RM86,400 | RM43,200 |
| Year 6 and after | RM28,800 | RM0 |
The difference is large. Waiting from year five to year six cuts the foreign seller's bill from RM86,400 to RM28,800, a saving of RM57,600 on the same sale.
The 7% retention
On top of the tax, the Bar Council's circular states that the retention sum for a non-citizen or foreign seller is 7% of the disposal price. On a RM1,728,000 sale, that is RM120,960 held back at completion.
In the first five years, the tax in our example is RM86,400, so the retention is RM34,560 higher than the bill. In year six it is RM92,160 higher. I have not confirmed how quickly any excess comes back to the seller, so ask your lawyer to explain the timing before you plan around that cash.
What to do with this
Three practical points follow.
- Count the years from your purchase before you list. A sale a few months before the sixth year can cost tens of thousands of ringgit more than one a few months after.
- Plan your cash flow for the retention, not only the tax. Money you need for another purchase may be tied up after completion.
- Rates and thresholds change with each Budget, and I read these sources in October 2026. Check the current LHDN page and ask your lawyer before you sign a sale agreement.