Stamp Duty In Malaysia: Everything You Need To Know!
Stamp duty is an important consideration in all real estate transactions. In any property purchase or transfer, it’s vital to properly assess all costs involved.
That’s not always an easy task however, so here’s a handy guide from us on what stamp duty is all about.
What Is Stamp Duty Malaysia?
Stamp duty is a essentially a fee on legal documents such as the instrument of transfer and loan agreement when you purchase a house. Stamp duty can be complicated, but never fear, we’re here to help you understand it better!
First off, you need to know that it’s divided into two categories:
Fixed Duties are charged at a set price, and include stamps for individual policies or copies.
Ad Valorem Duties are variable costs based on the value of a transaction that legal documents represent. These include taxes such as those based on the value of a property transfer or loan agreement.
What this basically means is, stamp duty is applicable at a fixed tier for the instrument of transfer (Fixed Duties) AND on a variable cost, depending on the value on the loan agreement (Ad Valorem Duties).
Stamp Duty Malaysia On Instrument of Transfer
Stamp duty is a tax based on specific tiers, with its own percentage for each level. The tiers are as follows (with effect from 2019):
Property price | Percentage |
First RM100,000 of the property price | 1% |
From RM100,001 to RM500,000 | 2% |
From RM500,001 to RM1 million | 3% |
Everything above RM1 million | 4% |
Stay with us! Now, what does that mean in practice? Let’s explore a simplified example. A property valued at RM500,000 today would be liable for charges across the first two tiers that we mentioned above.
Stamp duty would be charged according to 1% on RM100,000 of value and 2% on RM400,000 of value. So what will the stamp duty be?
RM1,000 stamp duty owed on the first RM100,000 value (1% x RM100,000)
RM8,000 stamp duty owed on the next RM400,000 value (2% x RM400,000)
Thus, RM1,000 + RM8,000 = RM9,000 stamp duty owed in total
If that all sounds complicated, don’t worry, a quick Google Search for a stamp duty calculator will lead you right to a nifty tool to do the number crunching for you!
[PropertyTip]The stamp duty for a Sale and Purchase Agreement is often mistaken for the stamp duty for Instrument of Transfer. The stamp duty for the SPA is only RM10 per copy, while the stamp duty for MOT and DOA is calculated according to a fee structure of 1% to 4%.[/PropertyTip]
Stamp Duty Malaysia On A Loan Agreement
It’s also important to factor in the stamp duty owed for any loan agreement which may be entered into as part of a property purchase.
As an important legal document, the loan agreement is also liable for stamp duty. Stamp duty on a loan agreement is a flat 0.5% rate, applied to the full value of the loan.
So, for a property priced at RM500,000, you would typically apply for a 90% loan (RM450,000) – as 10% of the property price will be for the down payment, which you would need to fork out yourself.
100% loan is possible, but uncommon for most people.
Thus, if you take out a loan of RM450,000 to cover your hypothetical property purchase above, you’re liable for a stamp duty of RM2,250 on that loan (0.5% x RM450,000).
Let’s go through this step-by-step. For your hypothetical property worth RM500,000, this is how you calculate your total stamp duty for the instrument of transfer AND loan agreement:
Stamp duty for instrument of transfer + Stamp duty on loan agreement = Total stamp duty to be paid
[(First RM100,000 x 1%) + (Next RM400,000 x 2%)] + 0.5% of loan amount (RM450,000)
= (RM1,000 + RM8,000) + (0.5% x RM450,000)
= RM9,000 + RM2,250
= RM11,250
Remember this stamp duty calculation as we’ll explain below how the stamp duty exemptions come into play 😉
Stamp Duty Exemption For 2023
Announced during the revised Budget 2023, for first-time homebuyers who purchase a home valued at RM500,000 and below, full stamp duty exemption will apply until the end of 2025.
While residential properties purchased worth between RM500,0001 to RM1 million will get a 75% stamp duty exemption up until 31st December 2023.
Relevant Guides:
51 Essential Property Jargon To Know For Buying A House In Malaysia
How To Calculate Your Affordability – Now vs Later
Memorandum Of Transfer (MOT) And 4 Important Documents In Malaysia
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