Understanding Memorandum of Transfer (MOT) and Stamp Duty in Property Transactions: A Guide for Buyers and Sellers in Malaysia

What is Stamp Duty and MOT

1. Memorandum of Transfer (MOT):

The Memorandum of Transfer (MOT) is a legal document used in property transactions in Malaysia. It is a crucial part of transferring ownership from the seller to the buyer. Here are some key points regarding the MOT:

  1. Preparation: The MOT is typically prepared by a lawyer or a qualified professional. It includes details about the buyer, seller, property description, purchase price, and any relevant terms and conditions agreed upon by both parties.
  2. Execution: Once the MOT is prepared, it needs to be signed by both the buyer and the seller in the presence of a witness. The signed MOT signifies the intention to transfer ownership of the property.
  3. Submission: After signing the MOT, it must be submitted to the relevant land office or authority for registration. The registration process involves paying the necessary fees and taxes, including the stamp duty.

2. Stamp Duty:

Stamp duty is a tax levied on various legal documents, including property-related transactions. In Malaysia, stamp duty is governed by the Stamp Act 1949. When it comes to property transactions, the following stamp duties are applicable:
  • Transfer of Property: Upon the transfer of property ownership, stamp duty is imposed on the MOT based on the property’s market value or the purchase price, whichever is higher. The stamp duty rates are as follows:
    • First RM100,000: 1%
    • RM100,001 to RM500,000: 2%
    • RM500,001 to RM1,000,000: 3%
    • Above RM1,000,001: 4%
  • Loan Agreement: If a property buyer obtains a loan from a financial institution, a loan agreement needs to be executed. Stamp duty is payable on the loan agreement, and the rates are determined based on the loan amount as follows:
    • First RM500,000: 1% (Min RM500)
    • Subsequent RM500,000: 0.8%
    • Subsequent RM2,000,000: 0.7%
    • Subsequent RM2,000,000: 0.6%
    • Subsequent RM2,500,000: 0.5%
    • Excess of RM7,500,000: shall not exceed 0.5%

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