All English Investment & Financial Latest News

Malaysia’s Stamp Duty Update For 2018

 

With the New Year now well underway, the government has updated the Stamp duty policy for property to help Malaysian citizens make affordable investments, especially those who are buying their first home.

Before we tell you what those updates are, let’s explain

What is Stamp duty?

Basically Stamp Duty – in Malaysia – is a tax levied on a variety of documents including legal, commercial and financial documents, all of which are specified in the First Schedule of Stamp Duty Act 1949.

All transactions including sale, transfer, mortgage and loan are subjected to legal stamps through this Stamp Duty.

Stamp Duty is divided into two categories:

  • Fixed Duties – Fixed charges are RM10 per unit, including stamps, policies, and stamps for every copy.
  • Ad Valorem Duties – Stamp duty based on the value of the transaction on the legal documents, including the Memorandum of Transfer / Deed of Assignment, the equity of the listed company, lease, loan contract and legal documents.

 

Read More: Best Time To Buy Your First Home

 

The new Stamp Duty for Real Estate in 2018

The government has proposed the following stamp duty exemptions for first time home-buyers:


Value of instruments of transfer and loan agreement for the purchase of first home Exemption given on stamp duty
Up To RM300,000 100%

 



Value of instruments of transfer and loan agreement for the purchase of first home Exemption given on stamp duty
Between RM300,001 and RM500,000 100% on the first RM300,000 and excess is subject to the prevailing rate of stamp duty

Note: The above mentioned exemption is applicable for sale and purchase agreement executed from 1st January 2017 to 31 December 2018

Stamp Duty Scale for 2018


First RM100,000 1% Stamp Duty Fee
RM100,001 To RM500,000 2% Stamp Duty Fee
RM500,001 and above 3% Stamp Duty Fee

 


Now let’s try explaining how you calculate stamp duty with a few scenarios:

Scenario 1: Buying your first house with the price amounting to RM300, 000

Let’s say the Loan amount is RM270, 000 (90%)

Property Stamp duty:

Stamp duty Fee 1%: For First RM100, 000 = RM1000

Stamp duty Fee 2%: RM100, 001 To RM300, 000 = RM4000

Total Stamp Duty to be paid is: RM 5000

Total exemption amount is: RM 5000

In other words, the balance you need to pay is: RM0

Loan Stamp Duty:

RM270, 000 X 0.50% = RM1500

And since it is your first house, you are exempted a maximum of RM1500.

So your payment is: RM1500 – RM1500 = RM0


Scenario 2: Buying your first house with the price amounting to between RM300, 001 and 500, 000; let’s say 400,000

Let’s say the Loan amount is RM360, 000 (90%)

Property Stamp duty:

Stamp duty Fee 1%: For First RM100, 000 = RM1000

Stamp duty Fee 2%: RM100, 001 To RM500, 000 = RM6000

Total Stamp Duty to be paid is: RM 7000

Total exemption amount is: RM 5000

In other words, the balance you need to pay is: RM 7000 – RM 5000 = RM 2000

Loan Stamp Duty:

RM360, 000 X 0.50% = RM1800

Again since it is your first house, you are exempted a maximum of RM1500.

So your payment is: RM1800 – RM1500 = RM300


Scenario 3: Buying your first house with the price amounting to above 500,001, let’s say 600,000

Let’s say the Loan amount is RM540, 000 (90%)

Property Stamp duty:

Stamp duty Fee 1%: For First RM100, 000 = RM1000

Stamp duty Fee 2%: RM100, 001 To RM500, 000 = RM8000

Stamp duty Fee 3%: above RM500, 000 = RM3000

Total Stamp Duty to be paid is: RM 12000

Total exemption amount is: RM 5000

In other words, the balance you need to pay is: RM 12000 – RM 5000 = RM 7000

Loan Stamp Duty:

RM540, 000 X 0.50% = RM2700

Again since it is your first house, you are exempted a maximum of RM1500.

So your payment is: RM2700 – RM1500 = RM1200

 

Hopefully you now have a better grasp of stamp duty and how the updated stamp duty has changed things for first time property buyers in Malaysia.


Looking to find out more about stamp duty and how it affects the price of a property? Talk to us, send us a message at
hello@iqiglobal.com or call us at 012-299-6155 or 037-450-6655.

Liked what you read? Check out this article next: How To Prepare Your Credit When You Are Buying A Home

Be a part of our award-winning team of investors, click here: https://goo.gl/WNpWx1

Related posts

IQI and IKON Joint Venture For GBP 100 Million Property Development In London

Azzam

IQI and Finology Partner to Facilitate Loan Approvals for Property Buyers

Azzam

The 4 Best Areas for Retirees & Expats to Live in Penang

iqiwpadmin