Investment Property Tax vs Property Trading Tax

What is about the tax difference between making property investment and property trading?

INVESTMENT PROPERTY TAX

If you bought a property to make money from rental, it was considered as an investment.

When you sell the property, based on Malaysia tax structure, the capital gain generated from the rental property comes under RPGT (Real Property Gain Tax) and is 5%.

Note: Flat rate of 5% real property gain tax will be applied to property sold within first 5 years of purchase effective from 1 January 2010. (Budget 2010)

PROPERTY TRADING TAX

If you sold a property that you bought to generate revenue, it was considered as a trading.

Under this situation, the revenue is taxed under the income tax provision and could come up to 25%.