When selling a house in Malaysia, it’s not just about getting the money from the sale. If you want a successful sale, you’ll actually have to pay a bit to get it sold – plus you don’t get to keep 100% of the proceeds!
There are several costs you’ll have to take into account. Among them are things such as property agent fees, valuation fees, legal fees, and Real Property Gains Tax (RPGT).
Since we’re now faced with highly uncertain times due to COVID-19 and the Movement Control Order (MCO), there’s even more reason for you to be careful when it comes to choosing the right time to sell your property.
We take a closer look at each of these costs:
1) Property agent fees
If you decide to engage the services of a property agent or real estate agent to sell your house, you’ll have to pay their fees.
A property agent’s services include pricing and advertising your property, arranging for viewing and bookings of the property, as well as negotiating with the prospective buyers on behalf of the seller.
In return for these services, the agent will charge a commission, which is usually 2-3% of the property’s selling price, and capped at 3%.
For example, if your property is sold at RM500,000, then the maximum commission the agent can get is RM15,000.
Your property agent may also charge you for additional costs such as marketing materials and transport, but they should let you know about these charges beforehand.
2) The costs involved if you decide to DIY the sale
Deciding not to use the services of a real estate agent when selling a house in Malaysia can save you thousands of Ringgit in commission and other fees.
However, since one of the services you would’ve gotten was helping you price your house, you’ll need to do this yourself if you decide not to hire an agent.
It’s strongly advisable though that you engage a certified appraiser to give your property a professional valuation so you can price it more accurately.
There will be charges incurred for these property valuation services. Here’s how the fees are calculated:
Price of the property |
Rate |
|
Up to the first RM100,000
|
0.25%
|
|
For the next residue up to RM2 million
|
0.2%
|
|
For the next residue up to RM7 million
|
0.167%
|
|
For the next residue up to RM15 million
|
0.125%
|
|
For the next residue up to RM50 million
|
0.1%
|
|
For the next residue up to RM200 million
|
0.067%
|
|
For the next residue up to RM500 million
|
0.05%
|
|
For the next residue over RM500 million
|
0.04%
|
So, if your property is valued at RM900,000, you’ll be charged:
= (0.25% x RM100,000) + (0.2% x RM800,000)
= RM250 + RM1,600
= RM1,850 (total valuation fees)
= RM250 + RM1,600
= RM1,850 (total valuation fees)
Besides hiring an appraiser to get a professonal valuation, you can also estimate the value of your house by looking up and comparing with the prices of other similar properties in the same area.
Once you’ve determined the value of your house, the next step is to let people know that it’s for sale.
Advertising it online via social media, or getting your friends and family to spread the news via word-of-mouth are effective ways.
3) Renovation and repair fees
The main reason anyone would spend money on sprucing up their property before selling is so they can ask a higher price for it.
Spending a bit extra to make your house/unit presentable (and to fix any damages!) will help bring up its value, and also get it sold faster.
Sometimes, even a fresh coat of paint is enough to give it new life. You could also consider hiring a professional cleaning service to give it a good cleanse.
You don’t need to spend a lot on renovation and repairs, but you do need to know where to spend for the best results, such as areas where faults might appear obvious.
For example, maybe you have a few cracked tiles in the bathroom, or your kitchen counter top is chipped and stained.
You’ll also want to repair things like leaking faucets, wonky doors, or cracks in the walls.
4) Legal fees
These fees only come into the picture after you’ve already secured a buyer for your house.
After securing a buyer, you’ll need a lawyer to draft the Letter of Offer as well as the Sale and Purchase Agreement (SPA).
The lawyer’s job is not only just to draft the SPA and Letter of Offer; he/she will also handle other legal matters associated with the sale.
The legal fees, or cost for hiring a lawyer, are charged based on the property’s selling price as follows:
Price of the property |
Rate |
|
For the first RM500,000
|
1.0%
|
|
For the next RM500,000
|
0.8%
|
|
For the next RM2,000,000
|
0.7%
|
|
For the next RM2,000,000
|
0.6%
|
|
For the next RM2,500,000
|
0.5%
|
So, if your selling price was RM2,00,000, you’d be paying RM16,000 in legal fees:
- The first RM500,000 would be 1%, for RM5,000.
- The next RM500,000 would be 0.8%, for RM4,000.
- The remaining RM1,000,000 would be 0.7%, for RM7,000.
5) Real Property Gains Tax (RPGT)
Last, but not least, when you’re selling a house in Malaysia, you’ll have to pay the Real Property Gains Tax (or RPGT for short).
The RPGT is a form of Capital Gains Tax levied by the Inland Revenue (LHDN). It’s basically tax you’ll have to pay to the government for any profits you receive on the sale of your house.
However, good news: The government has decided to provide a temporary exemption on this tax, because of the COVID-19 pandemic which caused the rakyat and economy to suffer badly.
There are a few requirements which you must meet first, though:
- The disposal of property must be from 1 June 2020 till 31 December 2021 only.
- This exemption is allowed for up to three residential properties per individual.
Now, under normal circumstances, this tax applies to you regardless of your citizenship status, as long as you’ve profited from selling any of your properties in Malaysia.
The government does provide a tax relief if there’s no profit made, or when you make a loss from the sale.
a. When are there exemptions for RPGT?
RPGT exemptions are provided for the following:
- A once-in-a-lifetime exemption on any chargeable gain from the disposal of a private residence for Malaysian citizens or Permanent Residents
PropertyGuru Tip
A private residence is defined as a building, or part of a building owned by an individual, or occupied as a place of residence.
- Exemptions on the first RM10,000 or 10% of the profit gained, whichever is higher
- When a property is transferred by way of a gift between immediate family members
PropertyGuru Tip
Family members are defined as spouses, parents, children, grandchildren, and grandparents.
b. Who needs to pay RPGT?
If you’re a Malaysian Citizen or a Permanent Resident:
If you sell your property within the first 5 years of acquiring it, you’ll be subject to RPGT.
If you’re Malaysian, you’ll also be charged 5% in property taxes after the 5th year according to the latest RPGT updates.
If you’re a Foreigner or Non-Citizen:
You’ll be charged a 10% RPGT when you sell your property 5 years or more after purchasing it.
If you’re a Company:
RPGT will be imposed on company shares that are disposed when 75% of the company’s tangible assets are in real estate.
The latest RPGT rates for the year 2021 are as follows:
Disposal in first year
30%
30%
30%
Disposal in 2nd year
30%
30%
30%
Disposal in 3rd year
30%
30%
30%
Disposal in 4th year
20%
30%
20%
Disposal in 5th year
15%
30%
15%
Disposal in 6th year and beyond
5%
10%
10%
c. How is RPGT calculated?
To calculate your RPGT, you’ll first need to know your chargeable gain. This is the difference between the purchase price of your property and its sale price.
You then multiply this with the relevant rate for RPGT. For example:
You, as a Malaysian citizen, purchased your property for RM500,000 3 years ago, and you sold it for RM800,000.
Your chargeable gain would then be RM300,000.
Since you are a Malaysian citizen, and you sold your property in its 3rd year, your RPGT rate would be 30%.
The RPGT you’d pay would then be: RM300,000 x 30% = RM90,000.
As you can see, selling a house in Malaysia isn’t as straightforward as just listing it and waiting for the money from your sale to come in.
Now that you know what are the extra costs involved in selling your house in Malaysia, you can actually get to selling it!
Not sure how to go about it? We have a complete guide to selling your house in Malaysia. You’re welcome 😉