Unlock savings with Malaysia’s 2024 Stamp Duty Exemptions for property transactions. Your guide to smart investments!
Stamp duty is a crucial aspect of real estate dealings, requiring a thorough evaluation of associated expenses in property transactions. Understanding stamp duty can be challenging, so here’s a helpful guide to provide clarity on its significance.
What Is Stamp Duty Malaysia?
Stamp duties apply to written documents, not transactions. They are typically imposed on legal, commercial, and financial documents. The responsibility for paying stamp duty is outlined in the Third Schedule of the Stamp Act 1949, which governs the assessment and collection of stamp duties.
There are two types of duties:
- Ad Valorem Duty: based on property value, applies to various instruments, including property transfers, interests creation, money security instruments, and specific capital market documents.
- Fixed Duty: unrelated to consideration, applies to various legal, commercial, and capital market instruments, as well as duplicates when the original is appropriately stamped.
This implies that stamp duty is levied at a set rate for the transfer instrument (Fixed Duties) and at a flexible rate based on the loan agreement’s value (Ad Valorem Duties).
Stamp Duty Malaysia on Instrument of Transfer
It’s crucial to consider stamp duty for any loan agreement associated with a property purchase.
| Price Tier | Stamp Duty (% of property price) |
|---|---|
| First RM100,000 | 1% |
| Next RM400,000 (RM101,000 – RM500,000) | 2% |
| The following amount up to RM1 million (RM500,001 – RM 1 million) | 3% |
| Thereafter (> RM1 million) | 4% |
The loan agreement, being a significant legal document, is subject to a flat 0.5% stamp duty rate applied to the entire loan amount.
In the case of purchasing a property valued at RM750,000 with a 90% loan (RM675,000), the stamp duty on the loan is RM3,375 (0.5% x RM675,000). To calculate the total stamp duty for the instrument of transfer and loan agreement, add the stamp duty for the transfer instrument to the stamp duty on the loan agreement, resulting in the total stamp duty of RM19,885 for the given example.
The total payment would be calculated as follows:
{(First RM100,000 X 1%) + (Next RM400,000 X 2%) + (Remaining RM250,000 X 3%) } + 0.5% of the loan amount (90% of RM750,000) + RM10 for stamp duty on SPA
= {RM1,000 + RM8,000 + RM7,500} + 0.5% X (RM675,000) + RM10
= RM16,500 + RM3,375 + RM10
= RM19,885
Tips: If this appears complex, a simple Google search for a stamp duty calculator will direct you to a useful tool that can handle the calculations for you!
Stamp Duty Exemption For 2024
In Malaysia, the government has implemented several stamp duty exemption policies to support homebuyers, especially first-time purchasers. Here are some key details about these policies:
- First-Time Homebuyers Exemption (Budget 2024):
- Applicable Period: The government, in Budget 2024, announced a stamp duty exemption for first-time homebuyers purchasing residential properties valued between RM500,001 to RM1 million.
- Exemption Rate: Eligible buyers can enjoy a 75% stamp duty exemption. This was an increase from the 50% exemption announced in July 2022 under the Keluarga Malaysia Home Ownership Initiative (i-MILIKI).
- Expiration Date: The exemption is applicable until December 31, 2023.
- Full Stamp Duty Exemption for First Homes (End of 2020 Announcement):
- Property Value Limit: A full stamp duty exemption is granted for both the instrument of transfer and loan agreement for the purchase of a first home not exceeding RM500,000.
- Exemption Criteria:
- The exemption is applicable for Sales and Purchase Agreements (SPAs) completed between January 1, 2021, and December 31, 2025.
- Limited to residential properties (excluding SOHO/SOFO/SOVO types) and serviced residences built for commercial use.
- Only Malaysian citizens are eligible.
- The buyer must not own any other residential property. Inherited or gifted properties disqualify the buyer.
- Two-Stage Exemption:
- The exemption is provided at two stages of transfer:
- From the property developer to a qualifying financial institution or bank.
- From the bank to the Malaysian citizen.
- The exemption is provided at two stages of transfer:
These exemptions are part of the government’s efforts to promote homeownership, particularly among first-time buyers. It’s essential for homebuyers to meet the specified criteria to qualify for the stamp duty exemptions. Additionally, these policies are subject to changes, and individuals should verify the latest updates and conditions with the relevant authorities or legal professionals.
