Are you planning on buying your first home? You should consider to buy your new home from a developer participating in the Home Ownership Campaign.
As a first-time home buyer, there are 101 factors to consider when buying your first home. These can be location, price, the reputation of developer, design, and so on. However, one factor that is often overlooked is the stamp duty and its impact on the timing of the purchase.
The budget 2019 specifies that any first-time home buyer for property priced up to RM1 million will get stamp duty exemption if they purchase a property from developer a participating in the Home Ownership Campaign between now and 30 June 2019.
Here’s how it works:
The stamp duty scale for 1 Jan 2019 to 30 June 2019 is as follows:
| STAMP DUTY SCALE | RATE |
| First RM100,000 | 1% |
| RM100,001 To RM500,000 | 2% |
| RM500,001 and above | 3% |
Stamp duty for loan agreement is at 0.50%
Stamp duties for SPA and Loan agreement for the first RM300,000 are exempted for 2019 and 2020.
Bonus for now until 30 June 2019
Important to remember: Starting from 1st January 2019 to 30th June 2019, for six months only, all stamp duty charges of homes valued up to RM1 million will be waived for first-time home buyers. However, this is only for property that is purchased from developers who are registered under the Home Ownership Campaign.
Let’s see how much you can save in the case above:
Example 1:
A first time home buyer, buys from a developer who registered under the Home Ownership Campaign. The value of the property is RM700,000, SPA: RM700000; Loan (90%): RM630000
| Property Stamp duty: | Stamp Duty Rates | Stamp Duty Amount (RM) | |
| First RM100,000 | 1% | 1000 | |
| RM100,0001 – RM500,000 | 2% | 8000 | |
| RM500,001 – RM700,000 | 3% | 6000 | |
| Total | 15000 | ||
| Total Exemption (Saving) | 15000 | ||
| Balance to pay | 0 | ||
| Loan Agreement Stamp Duty: | Stamp Duty Rates | Stamp Duty Amount (RM) | |
| First RM300000 | 0.50% | 1500 | |
| RM300001 – 630000 | 1650 | ||
| Total | 3150 | ||
| Total Exemption (Saving) | 3150 | ||
| Balance to pay | 0 |
In this case, the buyer will save a total sum of RM 18150 i.e. RM15000 from property stamp duty and RM3150 from the loan agreement stamp duty.
What happens if the buyer buys the property in the example after 30 June 2019?
The rules from 1st July 2019 will be as follows:
| STAMP DUTY SCALE | RATE |
| First RM100,000 | 1% |
| RM100,001 to RM500,000 | 2% |
| RM500,001 to RM1,000,000 | 3% |
| RM1,000,001 to RM2,500,000 (New!!) | 4% |
Stamp duty for loan agreement is at 0.50%, but both stamp duty for SPA & Loan Agreement will be exempted for the first RM300,000 for 2019 and 2020.
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Example 2:
Irrespective of whether the buyer buys from secondary market or primary market it will be as follows:
The value of the property is RM700,000; SPA: RM700,000; Loan (90%): RM630000
| Property Stamp duty: | Stamp Duty Rates | Stamp Duty Amount (RM) |
| First RM100,000 | 1% | 1000 |
| RM100,0001 – RM300,000 | 2% | 4000 |
| RM300,001 – RM500,000 | 2% | 4000 |
| RM500,001 – RM700,000 | 3% | 6000 |
| Total | 15000 | |
| Total Exemption | 5000 | |
| Balance to pay | 10000 | |
| Loan Agreement Stamp Duty: | Stamp Duty Rates | Stamp Duty Amount (RM) |
| First RM300000 | 0.50% | 1500 |
| RM300001 – 630000 | 1650 | |
| Total | 3150 | |
| Total Exemption | 1500 | |
| Balance to pay | 1650 |
In this case, the buyer will have to pay RM10,000 for property stamp duty and RM1650 for the loan agreement stamp duty.
Example 3:
If you are buying property from owner at RM1,200,000; SPA:
RM1,200,000; Loan (90%): RM108,0000
| Property Stamp duty: | Stamp Duty Rates | Stamp Duty Amount (RM) |
| First RM100,000 | 1% | 1000 |
| RM100,0001 – RM300,000 | 2% | 4000 |
| RM300,001 – RM500,000 | 2% | 4000 |
| RM500,001 – RM1,000,000 | 3% | 15000 |
| RM1,000,001 – RM1,200,000 | 4% | 8000 |
| Total | 32000 | |
| Total Exemption | 5000 | |
| Balance to pay | 27000 | |
| Loan Agreement Stamp Duty: | Stamp Duty Rates | Stamp Duty Amount (RM) |
| First RM300,000 | 0.50% | 1500 |
| RM300,001 – RM1,080,000 | 3900 | |
| Total | 5400 | |
| Total Exemption | 1500 | |
| Balance to pay | 3900 |
If a first-time home buyer buys a property from the secondary market (sub-sale) or from the developer (new project) the stamp duty for property and loan agreement is only exempted for the first RM300,000. In this case, the buyer will have to pay a total sum of RM30,900 i.e. RM27,000 for property stamp duty and RM3900 for the loan agreement stamp duty.
Conclusion
If you are planning to buy your first home, buy it from developers whose projects are registered with the Home Ownership Campaign (new projects) during this golden period, that is between now and 30 June 2019. You will save yourself a huge sum.
However, there are cases where a developer is absorbing these stamp duty (MOT) costs during this golden period. If you are not a first- time home buyer you can still benefit from similar offers if you buy property from such a developer and enjoy huge savings.
This article is written by Steve Ancheh.
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