In Malaysia the Stamp Act 1949 governs the application of stamp duty which is a key aspect of any sale and purchase of house transactions. For anyone buying or selling a house, understanding stamp duty and how to calculate the amount payable is crucial for both compliance and financial planning.
Briefly, the Stamp Act imposes a tax on the sale and transfer of property transactions. Stamp duty is a form of tax levied on the transaction value of a property, and it must be paid within 30 days from the date of execution of the sale and purchase agreement. It can be paid, either at the Stamp Office or online through the relevant platforms set up by the Malaysian government. This tax serves as a means of revenue for the government and ensures that transactions are legally recognized. Upon payment, a stamp duty certificate is issued and it is advisable to be attach the certificate to the sale and purchase agreement.
How to calculate Stamp Duty?
Calculating stamp duty for the sale and purchase of residential property is straightforward but requires attention to detail. The stamp duty is calculated based on the property\’s purchase price or the market value, whichever is higher.
Current Stamp Duty Rates
As of the latest update, the stamp duty rates for residential property transactions in Malaysia are as follows:
First RM100,000ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย : 1%
RM100,001 to RM500,000ย ย ย ย ย ย : 2%
RM500,000 to RM1,000,000ย ย ย : 3%
Above RM1,000,000ย ย ย ย ย ย ย ย ย ย ย : 4%
How to calculate the stamp duty
1.Determine the Purchase Price: Identify the purchase price stated in the Sale and Purchase Agreement or the market value of the property, if higher.
2.Apply the Stamp Duty Rates: Calculate the stamp duty in stages according to the applicable rates:
For the first RM100,000ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย : 1%
For the next RM400,000 (from RM100,001 to RM500,000)ย ย ย ย ย ย : 2%
For the next RM500,000 (from RM500,001 to RM1,000,000)ย ย : 3%
For any amount above RM1,000,000ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย : 4%
3.Add Up the Amounts: Sum the calculated amounts to find the total stamp duty payable.
For example, if the purchase price of the property is RM750,000, the stamp duty payable is calculated as follows:
1.First RM100,000ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย ย : 1% = RM1,000
2.Next RM400,000 (RM100,001 to RM500,000)ย ย ย ย : 2% = RM8,000
3.Next RM250,000 (RM500,001 to RM750,000)ย ย ย ย : 3% = RM7,500
Total Stamp Duty = RM1,000 + RM8,000 + RM7,500 = RM16,500
In conclusion, understanding the Stamp Act and the calculation of stamp duty is crucial for anyone involved in the property market as you can navigate property transactions more effectively and avoid any legal pitfalls associated with unpaid duties.
