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
Related Articles
Understanding Legal Due Diligence in Real Estate Transactions in Malaysia: A Comprehensive Guide for Buyers and Sellers
Real estate transactions in Malaysia, whether you’re buying your first home, investing in commercial property, or selling a family asset are often significant financial commitments. These transactions, while exciting, are also fraught with potential legal...A Management Corporation Imposing Different Rates of Maintenance and Sinking Fund Charges (‘Charges’) In A Strata Property- Yes or No?
INTRODUCTION The Strata Management Act 2013 in Malaysia governs the management and upkeep of stratified residential properties. It aims to ensure that these properties are well-managed, and that residents, developers, and landowners have their rights...Abandoned Housing Projects in Malaysia
Q. Are abandoned housing projects a big concern in Malaysia? A. Yes, and as a matter of fact, the concern is a global one. Q. How bad is the situation in Malaysia? A. The Deputy...租赁协议中的关键考虑事项
1. 租赁协议期限 明确租赁期的长短，例如为期一年、两年或其他具体时长。 2. 每月租金 说明租户每月需支付的租金金额。 3. 付款截止日期 协议应明确规定租金每月的付款日期，以避免误解或逾期付款。 4. 押金 租赁协议通常需要支付押金，包括： • 租金押金： 通常被称为保证金，用于覆盖潜在的损坏。 • 水电押金： 用于支付未缴清的水电费。 押金通常在租赁期结束后退还，前提是没有损坏或欠款。 5. 租赁协议的终止 该部分详细说明房东或租户在何种情况下以及如何终止协议，包括任何必 要的通知期限。 6. 续租选项 某些协议允许租户在租赁期满后继续租用，但房东可能会调整续租期的租 金或其他条款。 7. 转租 如果租户希望将房产或部分房产转租给他人，协议应明确规定相关规则。 大多数房东要求事先获得书面批准。 8. 维修责任 协议应明确房产维修的责任分配： •...What are the Key Considerations in a Tenancy Agreement?
1. Duration of the Tenancy Agreement This specifies the length of the rental period, such as whether it is for one year, two years, or another defined period. 2. Monthly Rent This outlines the monthly...Discharge of Charge and Deed of Receipt and Reassignment in Malaysia: A Comprehensive Guide
Introduction In the realm of property ownership and financing, ensuring proper legal documentation is vital for protecting the rights of both borrowers and lenders. Two key legal documents – Discharge of Charge and Deed of...Can Foreigner Own Immovable Property In Sarawak?
Q: Who is classified as a “foreigner”? A: As defined under the Sarawak Land Code, a foreigner is: – a) any person who is not a Malaysian citizen and not permanently resident in Sarawak; b)...What’s The Differences Between Individual Title and Master Title In Sabah?
Individual Title Master Title An independent land title issued to the owner of a specific piece of land or property. Definition A single title that covers a large piece of land before it is subdivided...Can I Sell My Portion of a Joint-Name Property?
Joint name property means ‘joint ownership’ or ‘co-proprietorship’ of a property. It simply refers to two people (or more) who each have a share of the same property. This could include cohabiting couples or friends...Costs involved in the Purchase of Property
1. Deposit of Purchase Price It could be 10% of the purchase price, or it could be any different amount as determined by the agreement between the seller and the buyer. 2. Legal Fees for...Real Property Gains Tax (RPGT) Calculation For A Deceased’s Property
1. By Way of Transfer & Transmission • Transmission between Deceased to Executor/Administrator and the transfer between Executor/Administrator to the Beneficiary is deemed no loss or gain. • In this event, no RPGT will be...Differences Between Individual Title vs Master Title
Individual Title Master Title Concept Had undergone subdivided process and issuance of separate issue document of title for each unit of property has been done. Yet to undergo sub-divided and separate issue document of title...The Differences between Developer Sales and Sub-Sales in Malaysia
In the Malaysian real estate market, there are two (2) common types of property transactions, which are stated below:- Developer Sales: Developer Sales are the purchase of properties directly from the Developer. These properties are...Can properties obtained via inheritance, gift, or love and affection transfer be subjected to division of matrimonial assets?
The definition of ‘matrimonial assets’ under the Law Reform (Marriage and Divorce) Act 1976 The interpretation and definition of the term ‘matrimonial assets’ under the Malaysian Law is rather wide and straightforward. Section 76 of...Your Rights after You Fully Settled Your Housing Loan
Upon confirmation from the bank that your housing loan has been fully settled, your first step will be appointing a qualified lawyer to assist you with the next procedure, of which there are two types,...