Stamp Duty Imposed For Transfer Of Properties In Malaysia

Stamp Duty Imposed For Transfer Of Properties In Malaysia

Stamp duty is one of the unavoidable costs in property purchase in Malaysia.

Under the Stamp Act, stamp duty is tax payable on the written documents during the sale and/or transfer of a real property. At least two documents will attract stamp duty in a conveyancing transaction:

i. the Sale and Purchase Agreement; and
ii. the Memorandum of Transfer (if the individual title/strata title of the Property has been issued) or the Deed of Assignment by way of transfer (if the strata title of the Property has yet to be issued).

In a conveyancing transaction, the Purchaser has to pay ad-valorem stamp duty on the written instrument being the conveyance of sale, ie. the Memorandum of Transfer or the Deed of Assignment by way of Transfer and a nominal stamp duty at on every copy of the Sale and Purchase Agreement.

The ad-valorem stamp duty is variable cost payable on the Memorandum of Transfer or the Deed of Assignment by way of Transfer will be calculated based on either the purchase price of the Property or the market value of the Property, whichever is higher, whereas the nominal stamp duty are charged at a set price of RM10.00 on every copy of the document.

In a conveyancing transaction, the Memorandum of Transfer or the Deed of Assignment by way of Transfer has to be submitted to the Collector of Stamp Duty for assessment of such ad-valorem stamp duty payable. Take note that the amount of purchase price stated in the Memorandum of Transfer or the Deed of Assignment by way of Transfer by the parties is not binding on the Collector of Stamp Duty and they have discretion to call upon a valuation expert to obtain the market value of the Property.

From 1st July 2019 onwards, the calculation of the ad-valorem stamp duty of transfer pursuant to normal sub-sale Sale and Purchase Agreement is as follows:-

In cases where the transfer is done pursuant to Sale and Purchase Agreement entered into with a developer, two situations can arise:-

i. When the individual title is available at the time of entering into the Sale and Purchase Agreement, the stamp duty assessed will be based on the purchase price stated in the Memorandum of Transfer and Sale and Purchase Agreement OR the market value of the Property;

ii. When the individual title is not issued during the signing the Sale and Purchase Agreement, the Sale and Purchase Agreement and the Deed of Assignment will carry only the nominal stamp duty of RM10.00 on every copy of the documents. When the individual title is issued subsequently, the stamp duty assessed will be based on the market value of the Property on the date of the Sale and Purchase Agreement entered into with the developer and not the date of the Memorandum of Transfer which is drawn up substantially later.

In circumstances where the transfer is done pursuant to a Deed of Assignment which has already been duly stamped (because the Property was bought when the individual title was not issued), then the stamp duty payable on the transfer is a nominal sum of RM10.00 pursuant to section 11 of the Stamp Act subject to production of the original Deed of Assignment which has already been stamped. Upon issuance of individual title of the Property, an application has to be made for endorsement on the Memorandum of Transfer to evidence that an ad-valorem stamp duty has been paid on the Deed of Assignment prior to the issuance of the individual title.

Further, transfer of property pursuant to grant of probate or letters of administrators will carry a nominal duty of RM10.00.

Many transfers are made between families or close relatives for love and affection without any Sale and Purchase Agreement. Take note that the ad-valorem stamp duty for some transfers for love and affection between families can be exempted either fully or partially.

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