Property and divorce lawyer Johor Bahru

1. What is stamp duty?

Stamp duties are imposed on instruments and not transactions. An instrument is defined as any written document and in general,- stamp duty is levied on legal, commercial and financial instruments. The person liable to pay stamp duty is set out in the Third Schedule of Stamp Act 1949. The Assessment and Collection of Stamp Duties is sanctioned by statutory law now described as the Stamp Act 1949.

2.Type of duties

Ad Valorem Duty

The rate of duty varies according to the nature of the instruments and the consideration stipulated in the instruments or the market value of the property. The imposition of ad valorem duty (that is, according to the value) is on:

  • Instruments of transfer (implementing a sale or gift) of property including marketable securities (meaning loan stocks and shares of public companies listed on the Bursa Malaysia Berhad), shares of other companies and of non-tangible property (e.g. book debts, benefits to legal rights and goodwill).
  • Instruments creating interests in property (e.g. Tenancies and Statutory Leases)
  • Instruments of security for monies, including instruments creating contracts for payment of monies or obligation for payment of monies (generally described as `Bond`)
  • Certain capital market instruments (e.g. Contract Notes)

Fixed Duty

Duty is imposed without any relation to the consideration paid or amount stated in the instrument. The imposition of fixed duty is on:

  • A number of other legal, commercial, mercantile or capital market instruments (e.g. Power or Letter of Attorney, Articles of Association of a Company, Promissory Notes, Policy of Insurance etc); and
  • A duplicate or a subsidiary or a collateral instrument when it can be shown that the original or principal or primary instrument has been duly stamped.

3. Which Instrument liable to stamp duty?

Instruments liable to stamp duty are those listed in the First Schedule of the Stamp Act 1949.

4. How much am I need to pay?

Hence, you might have to pay stamp duty if you buy a residential property or a piece of land in Malaysia over a certain price. There are various kind of documents/ instruments involved in one conveyancing transaction and all of them are subject to certain rate of stamp duty, i.e, sale and purchase agreement, letter offer, facilities agreement. The Memorandum of Transfer (MOT), an instrument to effect the ownership transfer and the Facilities Agreement, an instrument of security for monies, are both important instruments chargeable on ad valorem basis.

Stamp duty incurred on MOT

In Malaysia, the stamp duty on MOT is payable by buyer based on the market value of the property (instead of what purchase price indicated on your Sale and Purchase Agreement.)

First RM100,000: 1%
Next 400,000 -RM500,000) : 2%
RM500,001 – RM 1,000,000: 3%
RM 1,000,000 or more: 4%

Stamp duty incurred on Facilities Agreement

Stamp duty of 0.5% based on the loan amount.

5.Consult your lawyer and do your own budgeting before buying a house!

Hence, buying a is not straight forward as it it. You need to take into account the budget of your deposit, renovation , legal fees as well as stamp duty payable. Do consider ask for lawyer for a quote and do your own calculation first.

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