JV, Sell, Lease or Build Yourself? Options for Your Land

You own a piece of land. Perhaps you bought it long ago, perhaps you inherited it from your parents. It earns nothing, yet the quit rent (cukai tanah) is due every year. The question is: what should you do with it?

This guide compares five paths landowners usually consider: leave it, sell outright, lease it, develop it yourself, and a JV (joint venture) with a developer. We compare them by timeline, cash flow, risk, tax and control, with worked numbers so you can see the effect.

General information only, not legal/financial/tax advice. Every piece of land and every family is different. Get advice from your own lawyer and tax adviser before deciding.

Terms you should know

Before comparing, understand a few terms that will come up:

• JV (joint venture, usaha sama): an agreement in which the landowner contributes the land, while the developer contributes capital, expertise and work (approvals, construction, sales). The landowner receives an agreed share, for example completed houses, a share of the sales value, or a mix of both.
• RPGT (Real Property Gains Tax, in Malay CKHT): tax on the gain when you dispose of (sell, transfer) real property, under the Real Property Gains Tax Act 1976 (RPGT Act 1976).
• Disposal: any way you give up your rights to a property, including a sale and a transfer to a developer in a JV.
• Lease (pajakan): a right to use the land for a fixed term, registered on the title. The owner keeps the title.
• Housing developer’s licence (HDA): a licence under the Housing Development (Control and Licensing) Act 1966 [Act 118]. Section 5(1) of that Act prohibits anyone from carrying on housing development except a developer holding a licence.
• Planning permission (kebenaran merancang): approval from the local planning authority to start a development, as required by section 19(1) of the Town and Country Planning Act 1976 [Act 172].

The five options in brief

1. Leave the land

You remain the full owner, but there is no return. Quit rent keeps falling due, the land can be encroached on or used as a dumping ground, and with inherited land the heirs often keep disagreeing. Leaving the land is also a decision; its cost is just less visible.

2. Sell outright

You receive today’s price for raw land, and ownership passes to the buyer. It is the simplest route and brings money in fastest. The downside: you get no share of the added value if the land is later developed, and with inherited land the proceeds are split into small portions among many heirs.

3. Lease the land

You give another party the right to use the land for a fixed term in return for rent. Under section 221 of the National Land Code, a lease must exceed three years, with a maximum term of 99 years for the whole of the land or 30 years for part of it, and is registered using Form 15A. Tenancies of three years or less (section 223) are exempt from registration. You remain the owner, but under a long lease you lose practical control of the land for that period.

4. Develop it yourself

You become the developer: obtaining the change of land use conditions (tukar syarat), planning permission, a housing developer’s licence (if building houses for sale), financing, a CIDB-registered contractor and a sales team. A licensed developer must also open a Housing Development Account for each project (section 7A of Act 118). The potential return is the highest, but so are the capital, time and risk.

5. JV with a developer

You contribute the land and the developer bears the development costs. You receive the share agreed at the outset, and the land stays in your name until the stage agreed in the contract. The downside: a longer wait before you receive anything, and you depend on the developer’s performance. That is why protections in the agreement matter so much (see Landowner Protections in a JV Agreement).

Side-by-side comparison

Tax: what happens under each option

This section explains general principles only. Tax law changes, and the actual treatment depends on the facts of your case.

RPGT rates for individual citizens

LHDN publishes the RPGT rates under Schedule 5 of the RPGT Act 1976. For individual Malaysian citizens and permanent residents (Part I), the rates for disposals from 1 January 2022 are:

Rates for companies (Part II) and non-citizens (Part III) differ. For example, for companies the rate in the sixth year and later is 10% for disposals from 1 January 2019.

Other points from LHDN you should know:

• Individual exemption: an individual is entitled to an exemption of RM10,000 or 10% of the chargeable gain, whichever is higher (paragraph 2, Schedule 4, RPGT Act 1976).
• Private residence: an individual citizen or permanent resident may elect an exemption for one private residence once in a lifetime.
• Inherited property: the passing of a deceased person’s property to the executor or heirs is not taxed, because the disposal price is deemed equal to the acquisition price (paragraph 3(1)(a), Schedule 2, RPGT Act 1976).
• Retention sum: when you sell, the buyer (acquirer) must retain the whole of the money consideration or 3% of the total consideration, whichever is lower, and pay it to LHDN within 60 days. A 7% rate applies to disposers who are non-citizens and non-permanent residents.
• Forms: the RPGT return must be filed within 60 days of the disposal date.

RPGT in a JV: disposal date and price

Many landowners overlook this. According to LHDN’s RPGT Guidelines (2018 version, section 13, “Joint venture with a developer”):

• The disposal takes place when the landowner signs the joint venture agreement with the developer. The disposal date is the date of that agreement.
• The disposal price is the market value of the land on the date of the joint venture agreement, even though you have not yet received any units or money.
• When you later sell a unit received from the JV, its acquisition date is the date of the joint venture agreement, and its acquisition price is worked out proportionately from that land market value.

In other words: if you have owned the land for less than six years, you may owe RPGT on the land’s value when the JV is signed, before the project is complete. Plan your cash flow with a tax adviser.

What about income tax?

Worked examples

All figures below are invented for learning purposes. They are not real land prices and not an offer from RumahHQ.

How to decide: a decision table

Use this table as a starting point for a family discussion, not a final answer.

The decision process, step by step

1. Gather the land facts Title copy, quit rent receipt, survey plan and list of heirs if the land is inherited. See the documents list for a feasibility report.
2. Check the land's status Land use category, express conditions, restrictions in interest, charges or caveats, and the zone in the local plan.
3. Get a value and a feasibility report Current market value (for the sale option) and estimated number of homes (for the JV option).
4. Work out the tax effect With a tax adviser: acquisition date, RPGT rate, and when tax is payable under each option.
5. Discuss with family or heirs Who needs cash now, who wants a home, who is willing to wait.
6. Compare written offers Sale offers, lease terms, or JV proposals from more than one party if possible.
7. Lawyer's review before signing Your lawyer reviews the agreement and the protections that can be included in the agreement.

Common mistakes

• Comparing a sale price with “project value”. The sales value of completed homes is not your money. Compare what you actually receive, when you receive it, and the risk.
• Forgetting RPGT on the JV date. As in Example 2, tax can arise when the agreement is signed, not when the units are handed over.
• Signing an over-broad power of attorney. A power of attorney for a JV should be limited to specific tasks.
• No time limits in the agreement. Without deadlines for approvals and completion, your land can be tied up for years.
• Not checking the developer. Check the housing developer’s licence, SSM and CIDB registration, and past project record.
• Deciding without all heirs. For inherited land, an agreement that not all entitled parties agree to will cause problems later. Read Inherited Land With Many Heirs: Agreement & Partition.

Checklist before you choose

• I know the land use category and conditions on my title.
• I know the date the land was acquired and the likely RPGT rate.
• I have a current market value from a registered valuer, or at least a written offer.
• I have a feasibility report showing an estimated number of homes.
• All heirs or co-owners have been informed and agree to the process.
• I have asked a lawyer about the protections in the agreement.
• I understand when I will receive money or units, and what happens if the project is late.

Next step

Every piece of land is different. RumahHQ’s preliminary feasibility report shows a preliminary layout, an estimated number of homes and a comparison of JV versus sale for your land. It is free and carries no obligation. Learn more on the Landowners page, or read the JV Guide before discussing with your family.