When you’re in the business of building dreams in the shape of houses, mentioning stamp duty may not be the most attractive opener. However, it is a significant consideration for homebuyers to assess closing costs involved accurately.
What is stamp duty?
In Malaysia, stamp duty is a tax imposed on legal, commercial and financial documents specified in the First Schedule of Stamp Duty Act 1949. The two types are, namely:
- Ad Valorem Duty—The amount payable varies depending on the type and value of the transactional instrument, including taxes based on a property transfer or loan agreement’s value.
- Fixed Duty—Charged at a set price and includes stamps for individual policies or copies.
Stamp duty is an unavoidable cost in property purchases, levied on the Sale and Purchase Agreements (SPA) and the Memorandum of Transfer (MOT), calculated based on your property’s purchase price. Moreover, you will have to pay stamp duty on loan agreements based on a flat 0.5% rate of the total loan.
An instrument must be stamped within 30 days from its execution. Otherwise, defendants are obliged to pay the penalty imposed.
As of 2019, the stamp duty in Malaysia for properties over RM1 million experienced an increased rate from 3% to 4%. The latest rates are calculated on a specific tiered basis with its own percentage for each level as stated below.
|Price Tier||Stamp Duty Charge|
|RM100,001 to RM500,000||2%|
|RM500,001 to RM1 million||3%|
|Everything above RM1 million||4%|
How do I calculate?
It doesn’t sound effortless indeed, but we promise you it’s not as complicated as it seems. There is a myriad of stamp duty calculators online to assist you with all these tunnel-vision-inducing numbers.
If you wish to do it manually, here’s a simplified example. Let’s say you purchase a property valued at RM750,000 which is liable for charges across the first three tiers. You’ll have to pay a total of:
[(First RM100,000 x 1%) + (Next RM400,000 x 2%) + (Remaining RM250,000 x 3%)] + 0.5% of loan amount (90% of RM750,000)
= (RM1,000 + RM8,000 + RM7,500) + (0.5% x RM675,000)
=RM16,500 + RM3,375
= RM19,875 stamp duty owed
Budget 2021 Stamp Duty Exemption for First-Time Buyers
Great news, newbies! During the tabling of Budget 2021 on 6 November 2020, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz announced that stamp duty exemptions on the MOT and loan agreements would be provided for first-time homebuyers.
This means full exemption when purchasing your first home from 1 January 2021 to 31 December 2025 for properties priced at RM500,000 and below. The SPA should be executed and signed within the stipulated period.
Think RM11,250 in savings!
HOC 2020/2021 Stamp Duty Exemption
Since the merciless wave of the COVID-19 pandemic took a toll on our economy, Prime Minister Tan Sri Muhyiddin Yassin announced the Short-Term Economic Recovery Plan (PENJANA) in efforts to keep us afloat. Stamp duty exemption under the reintroduced Home Ownership Campaign (HOC) had taken effect from June 2020 onwards:
- MOT and loan agreement for purchasing residential homes priced between RM300,000 to RM2.5 million is granted a stamp duty exemption. This is subject to a minimum 10% discount by developers, and exemptions on the MOT is limited to the first RM1 million.
- A full stamp duty exemption is granted on loan agreement effective for SPA, signed between 1 June 2020 to 31 May 2021.
- RM25.00 or 5% of the deficient duty, whichever is greater, if stamped within 3 months after the time for stamping;
- RM50.00 or 10% of the deficient duty, whichever is greater, if stamped after 3 months but within 6 months after the time for stamping;
- RM100.00 or 20% of the deficient duty, whichever is greater, if stamped after 6 months from the time for stamping.
Now that you’re well-versed on your duties (pun intended), start your property hunt on LokaProp or find out more about the responsibilities that come with being a homeowner!