Stamp Duty In Malaysia: Everything You Need To Know!

PropertyGuru Editorial Team
Stamp Duty In Malaysia: Everything You Need To Know!
Stamp duty is an important consideration in all real estate transactions. In any property purchase or transfer, it’s vital to properly assess all costs involved.
That’s not always an easy task however, so here’s a handy guide from us on what stamp duty is all about.

What Is Stamp Duty Malaysia?

Stamp duty is a essentially a fee on legal documents such as the instrument of transfer and loan agreement when you purchase a house. Stamp duty can be complicated, but never fear, we’re here to help you understand it better!
First off, you need to know that it’s divided into two categories:
  • Fixed Duties are charged at a set price, and include stamps for individual policies or copies.
  • Ad Valorem Duties are variable costs based on the value of a transaction that legal documents represent. These include taxes such as those based on the value of a property transfer or loan agreement.
What this basically means is, stamp duty is applicable at a fixed tier for the instrument of transfer (Fixed Duties) AND on a variable cost, depending on the value on the loan agreement (Ad Valorem Duties).

Stamp Duty Malaysia On Instrument of Transfer

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Stamp duty is a tax based on specific tiers, with its own percentage for each level. The tiers are as follows (with effect from 2019):
Property pricePercentage
First RM100,000 of the property price1%
From RM100,001 to RM500,0002%
From RM500,001 to RM1 million3%
Everything above RM1 million4%
Stay with us! Now, what does that mean in practice? Let’s explore a simplified example. A property valued at RM500,000 today would be liable for charges across the first two tiers that we mentioned above.
Stamp duty would be charged according to 1% on RM100,000 of value and 2% on RM400,000 of value. So what will the stamp duty be?
  • RM1,000 stamp duty owed on the first RM100,000 value (1% x RM100,000)
  • RM8,000 stamp duty owed on the next RM400,000 value (2% x RM400,000)
  • Thus, RM1,000 + RM8,000 = RM9,000 stamp duty owed in total
If that all sounds complicated, don’t worry, a quick Google Search for a stamp duty calculator will lead you right to a nifty tool to do the number crunching for you!

PropertyGuru Tip

The stamp duty for a Sale and Purchase Agreement is often mistaken for the stamp duty for Instrument of Transfer. The stamp duty for the SPA is only RM10 per copy, while the stamp duty for MOT and DOA is calculated according to a fee structure of 1% to 4%.


Stamp Duty Malaysia On A Loan Agreement

It’s also important to factor in the stamp duty owed for any loan agreement which may be entered into as part of a property purchase.
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As an important legal document, the loan agreement is also liable for stamp duty. Stamp duty on a loan agreement is a flat 0.5% rate, applied to the full value of the loan.
So, for a property priced at RM500,000, you would typically apply for a 90% loan (RM450,000) – as 10% of the property price will be for the down payment, which you would need to fork out yourself.
100% loan is possible, but uncommon for most people.
Thus, if you take out a loan of RM450,000 to cover your hypothetical property purchase above, you’re liable for a stamp duty of RM2,250 on that loan (0.5% x RM450,000).
Let’s go through this step-by-step. For your hypothetical property worth RM500,000, this is how you calculate your total stamp duty for the instrument of transfer AND loan agreement:
Stamp duty for instrument of transfer + Stamp duty on loan agreement = Total stamp duty to be paid
[(First RM100,000 x 1%) + (Next RM400,000 x 2%)] + 0.5% of loan amount (RM450,000)
= (RM1,000 + RM8,000) + (0.5% x RM450,000)
= RM9,000 + RM2,250
= RM11,250
Remember this stamp duty calculation as we’ll explain below how the stamp duty exemptions come into play 😉

Budget 2021 Stamp Duty Exemption For First-Time Homebuyers

Announced changes to stamp duty in Malaysia mean that first-time homebuyers are now exempt from certain stamp duty charges.
This exemption was confirmed in Budget 2021 put forward by the Malaysian government on 6 November 2020.
Full stamp duty exemption will be given to both instrument of transfer and loan agreement for the purchase of a first home worth not more than RM500,000.
However, there are a few eligibility factors which you’d need to consider, according to the Federal Government Gazette:
  • This exemption will be for the Sale and Purchase Agreement that is completed between 1 January 2021 to 31 December 2025.
  • It is only applicable to residential properties, excluding SOHO/SOFO/SOVO types, as well as serviced residences.
  • First-time homebuyers must be Malaysian citizens.
  • The buyer must not already own a property; if he/she has inherited a property or was given one (no matter if individual or joint ownership), then he/she is no longer eligible.
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HOC 2021 Stamp Duty Exemption

*HOC has ended on 31 December 2021
With the COVID-19 pandemic hitting Malaysian shores and bringing about multiple Movement Control Orders (MCOs), our economy suffered a major blow as a result.
In order to help stimulate the economy once more and help the people where possible, our Government announced the Short-Term Economic Recovery Plan (PENJANA) on 5 June 2020.
In it, were two notable mentions of a stamp duty exemption as well, under the reintroduced Home Ownership Campaign (HOC) taking effect from June 2020:
  1. Instruments of transfer and loan agreement for the purchase of residential homes priced between RM300,000 to RM2.5 million will enjoy a stamp duty exemption. This is subject to a minimum 10% discount by the developer, and an exemption on the instrument of transfer is limited to the first RM1 million of the property price.
  2. A full stamp duty exemption is given on loan agreement effective for Sale and Purchase Agreements (SPA) signed between 1 June 2020 to 31 December 2021.

Relevant Guides:

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