What Is Stamp Duty ? Why Is It Relevant For Real Estate ?

Many of you may be curious about the concept of stamp duty. It is a fee or tax imposed on various legal documents such as loan agreements, tenancy agreements, and property transfer documents, including the Sale and Purchase Agreement (SPA).

Understanding stamp duty can be challenging, so here is a helpful guide to explain its significance and implications. Let's delve deeper into this topic !

1U Note: This article is based on the revised Budget 2023.

Stamp Duty On Sale & Purchase Agreement (Transfer Of Property)

One important thing to note is that stamp duty is applicable to the "instrument of transfer," which refers to the legal document that facilitates the transfer of ownership between the buyer and seller in a property transaction.

The new stamp duty rates (with effect from 2019 onwards) for property transactions in Malaysia are as follows:

1. For the first RM 100,000 of the property price: Stamp duty is charged at a rate of 1%
2. For the next RM 400,000 (i.e., from RM 100,001 to RM 500,000): Stamp duty is charged at a rate of 2%
3. For the next RM 500,000 (i.e., from RM 500,001 to RM 1,000,000): Stamp duty is charged at a rate of 3%
4. Everything above RM 1,000,000: Stamp duty is charged at a rate of 4%

When purchasing a house in Malaysia, it is mandatory for all individuals to pay the property stamp duty. Let's consider two examples to illustrate this.

Example 1:

The property purchase price is RM 1,000,000.

- For the first RM 100,000 at a rate of 1%: RM 100,000 x 1% = RM 1,000
- For the amount from RM 100,001 to RM 500,000 at a rate of 2%: RM 400,000 x 2% = RM 8,000
- For the amount from RM 500,001 to RM 1,000,000 at a rate of 3%: RM 500,000 x 3% = RM 15,000

The total Stamp Duty payable is RM 24,000.

Example 2:

The property purchase price is RM 1,500,000.

- For the first RM 100,000 at a rate of 1%: RM 100,000 x 1% = RM 1,000
- For the amount from RM 100,001 to RM 500,000 at a rate of 2%: RM 400,000 x 2% = RM 8,000
- For the amount from RM 500,001 to RM 1,000,000 at a rate of 3%: RM 500,000 x 3% = RM 15,000
- For the subsequent amount at a rate of 4%: RM 500,000 x 4% = RM 20,000

The total Stamp Duty payable is RM 44,000.

Please note that the examples above depict the stamp duty calculation for the Sale and Purchase Agreement. The stamp duty for the Loan Agreement will be discussed next.

If you find the calculations for stamp duty to be complex, don't fret. You can easily find a helpful stamp duty calculator with a quick Google search. This nifty tool will take care of the determining for you !

Stamp Duty On Loan Agreement 

In Malaysia, stamp duty is also applicable to loan agreements in addition to property transactions. When obtaining a loan for purchasing a property, you will be required to pay stamp duty on the loan agreement.

The stamp duty for loan agreements in Malaysia is calculated based on the loan amount borrowed. The current stamp duty rate for loan agreements is fixed at 0.5% of the total loan amount.

For a property with a price of RM 1,000,000, it is common for individuals to apply for a loan that covers 90% of the property value, which amounts to RM 900,000. The remaining 10% is typically the down payment that needs to be paid separately.

Therefore, if you obtain a loan of RM 900,000 to finance the mentioned property purchase, you will be responsible for paying a stamp duty of RM 4,500 on that loan (calculated as 0.5% of RM 900,000).

Final Stamp Duty Amount Needed To Pay

When purchasing a property priced at RM 1,000,000 in Malaysia, there are two types of stamp duty calculations to consider: the Sale and Purchase Agreement (SPA) and the loan agreement.

For the SPA, the stamp duty is determined based on the property price. Using the previous example from above, the stamp duty payable for the SPA would be RM 24,000.

In terms of the loan agreement, assuming you take out a loan covering 90% of the property price (RM 900,000), the stamp duty payable for the loan agreement would be RM 4,500. 

The total stamp duty payable will be RM 28,500.

It's important to note that these calculations are based on the current stamp duty rates and regulations in Malaysia. It is recommended to consult official sources or seek professional advice to ensure accurate and up-to-date information on stamp duty calculations for your specific situation.

There you go ! Simple isn't it ? The process of purchasing a house, whether it's a new project or a subsale property, might be quite confusing to many, thus it is advisable to consult a professional to get your questions answered.

Disclaimer: The information provided on the Newproject1U website is of a general nature and should not be considered as legal advice. Newproject1U will make efforts to update the website as necessary; however, please note that information can change without prior notice, and the accuracy of information, including that provided by third parties, cannot be guaranteed at any given time. Newproject1U does not provide any warranty regarding the accuracy and reliability of the information contained on the website. Unless prohibited by law, Newproject1U and its employees do not accept liability for any errors or omissions on the website or for any resulting loss or damages suffered by the recipient or any other individuals.

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