Stamp Duty And Administration Fee For Tenancy Agreement

To safeguard the interests of both the tenant and landlord, it's best to have a Tenancy Agreement in place. Here's how much it'll cost to have one drawn up for you, and stamped by LHDN to legalise it.
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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.

Do You Know What Are Your Rights As A Tenant?

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Do You Know What Are Your Rights As A Tenant?

What Should You Know About Landlord Rights?

Relevant Guide

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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.

So, let’s take a look at the list of rates we’ve compiled for both, alongside their step-by-step calculations for better clarity.

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Stamp Duty Fees

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 for 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.

This is the formula you’ll need to refer to:

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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

*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

*Additional copy of stamped Tenancy Agreement: RM96 + RM10 = RM106

  • > 3 years onwards

[(1200 x 12) – 2400]
---------------------------     x RM4 = RM192
            250

*Additional copy of stamped Tenancy Agreement: RM192 + RM10 = RM202

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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

 

Administration Charges

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).

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Did you know that rental income has been exempted from income tax?

You read that right, folks! This move was first introduced by the government during the tabling of Budget 2018, in order to encourage more Malaysians to rent out their properties to those who are really in need of a roof over their heads.

This meant that your rental income would be given a tax exemption of 50%, so long as you’re a Malaysian citizen who lives in, well… Malaysia. There are other requirements involved, of course, which are:

  1. The property is only for residential purposes.
  2. There is a legal document (Tenancy Agreement) between the landlord and tenant.
  3. Monthly rental received from each property is less than RM2,000. There is no limit to the amount of residential properties a landlord can have at this threshold.
  4. The Tenancy Agreement must be stamped by LHDN and put into effect by or after January 2018. There is a maximum period of three (3) consecutive years of evaluation from 2018 to 2020.

Better grab the opportunity while you still can, as this is the final year for you to enjoy this tax incentive!

 

If you’re about to begin the journey to home ownership and are wondering if there are additional fees for the legal documents used to purchase a property, you bet there are! Here’s the complete list of rates for you to refer to.

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