Stamp Duty on Instrument of Transfer and Loan Agreement
Q: What is Stamp Duty?
A: Stamp duty is a tax being imposed on varied of written agreement (including Instrument of Transfer of Property) by the Inland Revenue Board.
Q: Who will need to pay for stamp duty?
A: Generally, stamp duty is payable by the Transferee (i.e. person of which the Property being transferred to).
Q: What is the current stamp duty rate?
A: Stamp duty rate effective from 1st July 2019:-
| Consideration Sum | Stamp Duty Rate Charged |
|---|---|
| First RM100,000.00 | 1% |
| RM100,001.00 to RM500,000.00 | 2% |
| RM500,001.00 to RM 1 million | 3% |
| >RM1 million | 4% |
Illustration : Consideration Sum = RM450,000.00
Stamp duty payable :
First RM100,000.00 = 1% x RM100,000.00 = RM1,000.00
Remaining RM350,000.00 = 2% x RM350,000.00 = RM7,000.00
Total Stamp duty payable = RM1,000.00 + RM7,000.00 = RM8,000.00
Q : What is difference of ad-valorem stamp duty and nominal stamp duty?
A : Ad-valorem stamp duty is assessed based on the consideration sum as stated in the instrument of transfer or the market value of the property as at the date of Sale and Purchase Agreement or Instrument of Transfer. Nominal stamp duty is a fixed duty being imposed regardless the consideration sum or market value.
Q : How is Ad-Valorem Stamp Duty been assessed?
A : Upon submission of necessary information and documents in relation to the transfer of property to Inland Revenue Board (“IRB”), IRB will then refer the matter to the Valuation and Property Services Department of Malaysia (Jabatan Penilaian Dan Perkhidmatan Harta Malaysia (JPPH Malaysia)) for JPPH Malaysia to ascertained the market value of the property.
A valuation report will be prepared by JPPH Malaysia to Inland Revenue Board to imposed the Ad-Valorem Stamp Duty base on the stamp duty rate (as stated above).
Q : When do I need to pay the stamp duty?
A : After stamp duty is assessed, a Notice of Assessment will be issued by IRB to inform the Transferee/solicitor on the amount payable. All stamp duties shall be paid to IRB within thirty (30) days from the date of the said Notice, failing which late payment penalty will be imposed.
Q : If I am a first time home buyer, am I eligible to apply for stamp duty remission/waiver?
- A : Any individual may apply for stamp duty remission/waiver subject to the following conditions:-
- The individual must be a MALAYSIAN CITIZEN;
- The individual NEVER OWN any residential property including residential property obtained by inheritance or gift whether held individually or jointly;
- Residential property DOES NOT INCLUDE small office home office (SOHO), small office flexible office (SOFO), small office virtual office (SOVO) and service apartment.
Q : What is the stamp duty rate for Loan Agreement?
A : The stamp duty on Loan Agreement is 0.5% on the total loan sum (excluding financed insurance premium eg: MRTA, MLTA)
Illustration : Total loan sum = RM425,600.00 (inclusive of financed legal fee of RM2,000.00 and MRTA of RM3,600.00)
Loan sum to be taken into account for stamp duty calculation = RM422,000.00
Stamp duty payable = RM422,000.00 x 0.5% = RM2,110.00
Q : Full Stamp Duty waiver under Home Ownership Campaign? How does this work?
A : Home Ownership Campaign (“HOC”) was launched in January 2019 and the campaign had ended in December 2019.
On 5th June 2020, the Prime Minister has announced that the government will re-introduce Home Ownership Campaign under Short-Term Economic Recovery Plan (PENJANA).
Home Ownership Campaign Eligibility:-
- For Residential property only
- Direct purchase from Developer by a Malaysian citizen
- Property price within RM300,001 up to RM2.5 million (before 10% discount)
- Effective for Sales and Purchase Agreements (SPA) signed between 1st June 2020 to 31st May 2021
- Eligible properties must be registered with REHDA Malaysia (Peninsular Malaysia), SHAREDA (Sabah) and SHEDA (Sawarak).
Benefits under HOC:-
- Minimum 10% discount to be given by the Developer on the purchase price
- Stamp duty on the Instrument of Transfer and Loan Agreement is exempted as per the table below:-
Instrument of Transfer
| House Price | Stamp Duty |
|---|---|
| Up to RM2.5 million | Exempted |
| RM1,000,001 and above | 4% |
Loan Agreement
| Loan Sum | Stamp Duty |
|---|---|
| Up to RM2.5 million | Exempted |
| RM2,500,001 and above | 0.5% |
** Note : The above details are subject to official release of Government Gazett
This article is written by
Liew Chen Siang
Partners, Low & Partners
Yap Yie Laine
Senior Associate, Low & Partners
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