Are you a potential tenant who’s on the lookout for a new place to call ‘home’? Or perhaps, you’ve just become a proud homeowner, and would like to earn some passive income?
By renting out your property (even if it’s just a room or two instead of the whole place), it’ll allow you to get some money to help you with the monthly instalments. It’ll be up to you if you want to go for short- or long-term rentals.
As a potential tenant or landlord, you’re going to have to be aware of the fact that there’s currently no laws in place to protect either one of you, but you can take precautionary measures by drawing up a Tenancy Agreement.
This is a piece of legal document that clearly outlines the duties and responsibilities of both parties, as long as the tenant is still living within the premises.
It also contains other relevant terms and conditions, like the description of the unit/room being rented out, the furniture and fittings contained within (if any), as well as other utility bills, to name just a few.
You also need to make sure you know about two additional fees that come with the renting process – the stamp duty fees and administration charges for a Tenancy Agreement!
PropertyGuru Tip
The stamping is to make the Tenancy Agreement legal, and admissible in court, and is done by the Inland Revenue Board of Malaysia (LHDN). The administration charge goes towards the real estate agency or landlord.
What Is Stamp Duty All About?
Stamp duty is a tax on legal documents in Malaysia. Some examples of documents where stamp duties are applicable include your Tenancy Agreement, Instrument of Transfer and Loan Agreements.
Stamp duty fees are typically paid by the buyer, not the seller. So like it or not, you have to get your written documents stamped within 30 days of the date of execution or risk penalties.
How Much Is Stamp Duty For Tenancy Agreement?
Rather than a single fixed fee, stamp duty for tenancy agreements are calculated based on every RM250 of the annual rental.
Based on the table below, this means that for tenancy periods less than 1 year, the stamp duty fee is RM1 per RM250. If your tenancy period is between 1 – 3 years, the stamp duty fee is RM2 per RM250. Scroll down to see a sample calculation!
Duration of tenancy |
Amount |
|
1 year or less
|
RM1
|
|
> 1 year to 3 years
|
RM2
|
|
> 3 years onwards
|
RM4
|
*If you’d like an additional copy of the tenancy agreement to be stamped as well, the stamping fee is set at a flat rate of RM10.
PropertyGuru Tip
The first RM2,400 of your annual rental income is entitled to stamp duty exemption! Therefore, when calculating the stamp duty fee, you need to deduct RM2,400 from the annual rental amount to determine the taxable rental.
How To Calculate Stamp Duty In Malaysia?
Calculating the stamp duty amount for your tenancy agreement isn’t that hard. All you need is a simple formula which you can refer to here:
Step 1:
Determine the total amount of your annual rental. For example, you want to rent out your unit at RM1,200 per month. Your annual rental would be RM14,400 (RM1,200 per month x 12 months).
Step 2:
Calculate the taxable rental. As the first RM2,400 is exempted from stamp duty, the taxable rental amount would be RM12,000 (RM14,400 – RM2,400).
Step 3:
The stamp duty would be charged according to the duration of the tenancy (refer to table above). We’ll give an example for each one, using the same assumption of renting out your whole unit at RM1,200 per month:
- 1 year or less
[(1200 x 12) – 2400]
————————— x RM1 = RM48
250
————————— x RM1 = RM48
250
*Additional copy of stamped Tenancy Agreement: RM48 + RM10 = RM58 (this total amount is for 2 copies of the Tenancy Agreement, one for the landlord and one for the tenant, both of which need to be stamped by LHDN in order to make it legal and admissible in court.)
- > 1 year to 3 years
[(1200 x 12) – 2400]
————————— x RM2 = RM96
250
————————— x RM2 = RM96
250
*Additional copy of stamped Tenancy Agreement: RM96 + RM10 = RM106
- > 3 years onwards
[(1200 x 12) – 2400]
————————— x RM4 = RM192
250
————————— x RM4 = RM192
250
*Additional copy of stamped Tenancy Agreement: RM192 + RM10 = RM202
One very important thing to remember about the calculation for stamping fee is: If the amount you get after you deduct the exemption of RM2,400 from the rental per annum is NOT a multiple of 250, you need to round that figure up to the nearest (and highest) 250.
Confused? Don’t be! Let’s take a look a sample scenario to explain it, by assuming that you want to rent out your room at RM250 per month, for a period of a year:
[(250 x 12) – 2400] = RM600
As RM600 is not a multiple of 250, you need to round that up to the nearest (highest) 250, which is RM750. Thus, your stamping fee would be:
(RM750/250) x RM1 = RM3
How Much Is The Administration Fee For Tenancy Agreements?
Stamp duty aside, there’s another fee to account for which is the administration fee. Yes, that’s another sum of money you have to fork out, and yes, you should know by now that there are fees for everything when it comes to all the paperwork.
Rental per month |
Amount |
|
< RM1,000
|
RM100
|
|
> RM1,000 to RM1,999
|
RM150
|
|
> RM2,000 to RM3,000
|
RM200
|
|
> RM3,000 to RM4,000
|
RM250
|
|
> RM4,000
|
RM300
|
*This is a recommended guideline. The implementation of the fee’s exact amount is up to the discretion of the real estate agency or landlord.
The administration fee is a little more straightforward (thankfully!), as it is a one-time charge based on the monthly rental amount.
Using the earlier example of your whole unit being rented out at RM1,200 per month, since that figure is more than RM1,000, the administration fee would be charged at RM150.
Therefore, your grand total of both the stamp duty fee and administration charge would be RM208 (RM58 + RM150).
Relevant Guides:
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