The first tax in the equation is the Property Stamp Duty (a.k.a Memorandum of Transfer). This tax is incurred when there is a transfer of ownership from a property owner or developer to the buyer. The total Property Stamp Duty incurred is subject to the transacted price of the property and is calculated based on the tiers below (as of 2019):
For example, if the property price is RM800,000, the amount we have to pay for the Property Stamp Duty is:
It is quite a hefty sum to pay in owning a property here in Malaysia. However, the Malaysian Government has implemented a Stamp Duty Exemption under Budget 2021 where first-time Malaysian homebuyers get exempted from paying this tax until December 2025, specifically for properties of not more than RM500,000. Given our current circumstances with the pandemic, this exemption provides an option for many to own their first home.
This tax is very straightforward. You’ll need to pay the stamp duty on your loan used to purchase your property. The rate is 0.5% of the total loan amount undertaken. The Malaysian Government has also implemented an exception to this tax for first-time homebuyers as aforementioned above but it is only applicable for Malaysian citizens.
Property assessment tax or Cukai Taksiran is one that you encounter once you have purchased and are now a proud owner of your property. This tax is calculated based on a percentage rate of the annual rental value of your property. The percentage rate can range from 2% to 9%, depending on your property's size, type, and state. All properties, regardless of property type, will incur a Property Assessment Tax. This tax is charged by the relevant local authorities and will assist in maintaining the local area and is collected over two payments across the year.
Another tax upon owning a property is Quit Rent, a land tax incurred for any property that resides on a piece of land, even if it is just the land itself. Not surprisingly, this tax varies from the size of the land to its location in different states of Malaysia. We found a website that has compiled information on Quit Rent here. This tax is assessed and imposed by the local state government through the country’s land office. This tax is payable to the relevant land office or at select POS Malaysia offices across the country.
The last and final tax called real property gains tax (RPGT for short) only occurs when you sell your owned property. RPGT is a capital gains tax that is chargeable on the profit gained from selling property. A summary of the tax rates can be found in the table below (as of 1st January 2019):
For more in-depth explanations and calculations on RPGT, check out this link. In addition, the Malaysian Government has also updated the RPGT exemptions where property owners get exempted from paying the 5% (or higher) rate should a residential property be sold during the period from 1st June 2020 to 31st December 2021. Once again, this exemption only applies to Malaysian citizens.
In conclusion, we hope that this brief tax property guide is enlightening and provides you with insight into the different taxes to expect when owning a property here in Malaysia. Thank you, and we wish you the best in your property journey!
Rimbun is the flagship project of Amphil Corporation Sdn Bhd, which embodies their passion and philosophy of building well-designed green homes with unique features that will generate excellent investment value. It results from the close collaborative work between Amphil and a team of innovative, reputable and committed technical consultants who have decades of experience in a whole range of luxury projects.