Are you feeling lost in the maze of stamp duty or property transaction costs in Malaysia?
The ever-changing rules and calculations surrounding stamp duty can feel overwhelming, leaving you anxious about making a costly mistake.
But fear not! This comprehensive guide will demystify stamp duty, providing you with the clarity and confidence to navigate your property journey in Malaysia.
Stamp Duty Malaysia
- 1. Understanding Stamp Duty
- 2. Why Should You Care About Stamp Duty?
- 3. The Different Shades of Stamp Duty: Ad Valorem and Fixed Duties
- 4. Who Foots the Bill? Determining Liability for Stamp Duty
- 5. Stamp Duty Rates on Instruments of Transfer in Malaysia (2025)
- 6. Stamp Duty on Loan Agreements
- 7. Stamp Duty Exemptions and Remissions in Malaysia
- 8. Stamp Duty on Tenancy Agreements (NEW)
- 9. Paying Your Stamp Duty: The STAMPS System
- 10. Deadlines and Penalties for Late Stamping (NEW)
- 11. Significant Changes to Stamp Duty in 2025 and Beyond
- 12. Frequently Asked Questions (FAQs) about Stamp Duty in Malaysia:
1. Understanding Stamp Duty
Stamp duty is a tax levied on legal documents, specifically those related to the purchase or transfer of real estate, as well as tenancy, etc. in Malaysia. It’s governed by the Stamp Act 1949 and overseen by the Lembaga Hasil Dalam Negeri Malaysia (LHDN), the Inland Revenue Board of Malaysia.
Think of it as a mandatory fee that validates your property-related documents, making them legally binding and admissible in court. It is not merely a formality but a cornerstone of secure and legal property transactions.
2. Why Should You Care About Stamp Duty?
Understanding stamp duty is not just about ticking a legal box but making informed decisions.
No matter you’re a first-time homebuyer, a seasoned investor, or simply transferring property to a loved one, knowing the ins and outs of stamp duty can save you significant sums of money and prevent legal headaches down the road.
It directly impacts your financial planning and ensures a smooth, legally sound property transaction.
3. The Different Shades of Stamp Duty: Ad Valorem and Fixed Duties
In Malaysia, stamp duty comes in two primary forms:
- Ad Valorem Duty: This is the most common type for property transactions. The amount payable is calculated as a percentage of the property’s value or the consideration stipulated in the instrument, whichever is higher. The higher the property value, the higher the stamp duty, although there are some exemptions that we will discuss later.
- Fixed Duty: This type of duty applies a predetermined amount, regardless of the property’s value. It’s typically levied on specific legal documents, such as certain types of agreements, as outlined in the First Schedule of the Stamp Act 1949.
4. Who Foots the Bill? Determining Liability for Stamp Duty
The responsibility for paying stamp duty isn’t arbitrary.
The Third Schedule of the Stamp Act 1949 clearly outlines who is liable for specific instruments. In most property transactions, the buyer is responsible for paying the stamp duty on the instrument of transfer (MOT) and SPA.
The borrower is responsible for paying the stamp duty on the loan agreement.
5. Stamp Duty Rates on Instruments of Transfer in Malaysia (2025)
The cost of stamp duty on the transfer of property, excluding shares, stock, or marketable securities, depends on whether the buyer is a Malaysian citizen/permanent resident or a foreigner/foreign company.
a. For Malaysian Citizens and Permanent Residents:
| Price Tier | Stamp Duty Rate |
| First RM100,000 | 1% |
| RM100,001 to RM500,000 | 2% |
| RM500,001 to RM1,000,000 | 3% |
| Above RM1,000,000 | 4% |
Source: iProperty Malaysia
b. For Foreign Companies, Non-Citizens, and Non-Permanent Residents:
| Price Tier | Stamp Duty Rate |
| All Price Tiers | 4% |
Source: PwC
c. Example Calculation
Let’s say you’re a Malaysian citizen buying a property for RM600,000. Here’s how the stamp duty is calculated:
- First RM100,000: RM100,000 x 1% = RM1,000
- Next RM400,000: RM400,000 x 2% = RM8,000
- Remaining RM100,000: RM100,000 x 3% = RM3,000
- Total Stamp Duty: RM1,000 + RM8,000 + RM3,000 = RM12,000
6. Stamp Duty on Loan Agreements
When you take out a loan to finance your property purchase, the loan agreement is also subject to stamp duty.
a. Standard Rate
Generally, a flat rate of 0.5% of the total loan amount applies.
b. Reduced Rate
For specific Malaysian Ringgit loan agreements or instruments without security and repayable on demand or in a single bullet repayment, a reduced rate of 0.1% may apply.
c. Example Calculation
If you take out a loan of RM540,000 (90% of the RM600,000 property), the stamp duty on the loan agreement would be:
RM540,000 x 0.5% = RM2,700
7. Stamp Duty Exemptions and Remissions in Malaysia
Fortunately, the Malaysian government offers several exemptions and remissions to ease the financial burden of stamp duty, particularly for first-time homebuyers and specific property transfers.
a. First-Time Homebuyers Exemption (i-MILIKI):
This initiative aims to encourage homeownership among Malaysians.
- Properties valued up to RM500,000: Full stamp duty exemption on both the instrument of transfer and loan agreement. This applies to Sale and Purchase Agreements executed between 1 January 2021 and 31 December 2025.
- Properties valued between RM500,001 and RM1,000,000: 75% stamp duty exemption on the instrument of transfer for SPAs executed by December 31, 2023. Starting from 2024, first-time homebuyers purchasing homes above RM500,001 will not benefit from any stamp duty exemption.
b. Eligibility Criteria for First-Time Homebuyers Exemption:
- Malaysian citizen.
- Must not already own a residential property (including inherited or gifted property).
- Applicable to residential properties only (excluding SOHO/SOFO/SOVO types and serviced residences built for commercial use).
c. Transfer Between Family Members:
- Parent and Child:
- Before April 1, 2023: 50% remission of stamp duty.
- From April 1, 2023: Full exemption for the first RM1 million of the property’s value; 50% remission on the ad valorem stamp duty for the remaining value. This applies only to Malaysian citizens.
- Grandparent and Grandchild: From April 1, 2023: Full exemption for the first RM1 million of the property’s value; 50% remission on the ad valorem stamp duty for the remaining value. This applies only to Malaysian citizens.
- Husband and Wife: 100% exemption.
- Siblings: No exemption.
d. Other Exemptions and Remissions:
- Abandoned Housing Projects: Stamp duty exemption on instruments executed by a rescuing contractor or developer approved by the Ministry of Housing and Local Government, for loan agreements and transfer of revived residential properties in abandoned projects. This exemption is valid for instruments executed by December 31, 2025.
- Conversion of Conventional Partnership or Private Company to Limited Liability Partnership: Stamp duty exemption on all instruments of transfer of land, business, asset, and share.
- Micro Small and Medium Enterprises (MSMEs):
- Stamp duty exemption on loan/financing agreements executed between MSMEs and investors for funds raised on a peer-to-peer platform registered and recognized by the Securities Commission (SC). This is valid from January 1, 2022, to December 31, 2026.
- Stamp duty exemption on instruments for loan or financing up to RM50,000 (increased to RM100,000 for agreements executed from January 1, 2025) between MSMEs and participating banks or financial institutions under the National Small and Medium Enterprise Development Council.
- Stamp duty exemption on loan or financing instruments executed from January 1, 2025 to December 31, 2026 by MSMEs and investors through Initial Exchange Offering platforms registered with SC.
e. Stamp Duty Order (Remittance & Exemption):
You can check out the various stamp duty order for remittance & exemption from year 2002 until 2021 on LHDN Malaysia official website.
8. Stamp Duty on Tenancy Agreements (NEW)
When it comes to rental properties, stamp duty is calculated based on the monthly rental and the duration of the tenancy. As of January 1, 2025, the new rates for stamp duty on rental agreements are as follows:
| Rental Period | Stamp Duty |
| Not exceeding 1 year | RM1.00 |
| Exceeding 1 year but not exceeding 3 years | RM3.00 |
| Exceeding 3 years but not exceeding 5 years | RM5.00 |
| Exceeding 5 years or for an indefinite period | RM7.00 |
Source: 小晴天~房产报报看
Stamp duty is calculated based on every RM250.00 or part thereof, depending on the average rent and other considerations for the entire year.
a. Example Calculation (Based on old calculation):
Let’s say you’re renting a property for RM1,800 per month for 3 years.
- Calculate Annual Rent: RM1,800 x 12 months = RM21,600
- Subtract the Exemption Threshold (if applicable): RM21,600 – RM2,400 = RM19,200 (The RM2,400 threshold is no longer applicable as of January 1, 2025)
- Divide by RM250 and Round Up: RM21,600 ÷ RM250 = 86.4, rounded up to 87
- Multiply by the Applicable Rate (RM3 for 3-year tenancy, based on old rates): 87 x RM3 = RM261
- Add Stamp Duty for Tenant’s Copy: RM261 + RM10 = RM271
b. Important Note
The tenant is responsible for paying the stamp duty on the tenancy agreement, not the landlord.
9. Paying Your Stamp Duty: The STAMPS System
Gone are the days of manually stamping documents at the LHDN office.
Now, you can conveniently pay your stamp duty online through the Stamp Assessment and Payment System (STAMPS) via the LHDN website (https://stamps.hasil.gov.my).
This digital system streamlines the process, making it faster and more efficient.
a. Step-by-Step Guide to Paying Stamp Duty Online via STAMPS:
- Register as a STAMPS User: If you are not already registered, create an account on the STAMPS portal.
- Log in to STAMPS: Access the system using your registered ID and password.
- Select “Sistem Duti Setem”: Choose the stamp duty system from the available options.
- Choose “Penyeteman” and then select the type of instrument: For example, select “Perjanjian Sewa” for tenancy agreement and “Pindah Milik Tanah/ Harta” for the instrument of transfer (e.g., MOT).
- Fill in the Required Information: Provide details about the instrument, property, and parties involved.
- Upload Supporting Documents: You may need to upload scanned copies of the relevant documents (e.g., SPA, loan agreement, tenancy agreement).
- Make Payment: Pay the stamp duty online using FPX or other available online payment methods, such as CIMB BizChannel and Public Bank.
- Print Stamp Certificate: Once the payment is successful, you can print the stamp certificate. Affix this certificate to the original instrument as proof of payment.
b. Important Note
A stamp certificate is issued electronically for online applications through STAMPS. The certificate should be affixed or attached to the instrument, and the instrument is considered duly stamped.
10. Deadlines and Penalties for Late Stamping (NEW)
It’s crucial to pay stamp duty within the stipulated timeframe to avoid penalties.
- Instruments executed within Malaysia: Must be stamped within 30 days of execution.
- Instruments executed outside Malaysia: Must be stamped within 30 days after it has been first received in Malaysia.
a. Penalties for Late Stamping (Effective from January 1, 2025):
| Delay | Penalty |
| Not exceeding 3 months | RM50 or 10% of the unpaid stamp duty, whichever is higher |
| Exceeding 3 months | RM100 or 20% of the unpaid stamp duty, whichever is higher |
Source: 小晴天~房产报报看, The Sun
b. Before January 1, 2025, the old penalty rates are:
| Delay | Penalty |
| Not exceeding 3 months | RM25 or 5% of the unpaid stamp duty, whichever is higher |
| Exceeding 3 months, not exceeding 6 months | RM50 or 10% of the unpaid stamp duty, whichever is higher |
| Exceeding 6 months | RM100 or 20% of the unpaid stamp duty, whichever is higher |
Source: LHDN Malaysia, Cleartax, 小晴天~房产报报看
c. Consequences of Unstamped or Insufficiently Stamped Instruments:
- Inadmissible in Court: The document will not be accepted as evidence in a court of law.
- Cannot Be Acted Upon by Public Officer: A public officer will not act upon an unstamped or insufficiently stamped instrument.
11. Significant Changes to Stamp Duty in 2025 and Beyond
The Malaysian government is implementing significant changes to the stamp duty regime, transitioning towards a self-assessment system.
a. Key Changes
- Mandatory Stamping: From 2026, stamp duty will be mandatory for all instruments under the Stamp Act, including intercompany agreements.
- Self-Assessment System: This will be implemented in phases:
- Phase 1 (from January 1, 2026): Rental or lease, general stamping, and securities.
- Phase 2 (from January 1, 2027): Instruments of transfer of property ownership.
- Phase 3 (from January 1, 2028): All other instruments not covered in Phases 1 and 2.
- IRB Audit Power: The IRB will have the authority to audit agreements up to five years after the duty is paid or would have been paid.
- Increased Penalties: The maximum penalty is RM100 or 20% of the deficient duty, whichever is higher. If the matter goes to court, the fines can range from RM1,000 to RM10,000, and may have to pay a special penalty equivalent to the underpaid duty.
b. Expert Insights
“The amendments will make stamp duty mandatory and grant the Inland Revenue Board (IRB) the authority to audit agreements up to five years after payment,” says Soh Lian Seng, Head of Tax at KPMG in Malaysia.
He further emphasizes the importance of accurate calculations and classifications under the self-assessment system to avoid hefty penalties.
12. Frequently Asked Questions (FAQs) about Stamp Duty in Malaysia:
a. How much is stamp duty in Malaysia 2025?
The stamp duty rates for property transfers in 2025 depend on the property value and the buyer’s status (Malaysian citizen/permanent resident or foreigner). For Malaysian citizens and permanent residents, the rates are tiered: 1% for the first RM100,000, 2% for the next RM400,000, 3% for the next RM500,000, and 4% for the value exceeding RM1,000,000. For foreigners and foreign companies, a flat rate of 4% applies. For loan agreements, the general rate is 0.5% of the loan amount. Tenancy agreement stamp duty rates have also changed – refer to the “Stamp Duty on Tenancy Agreements” section above.
b. Is there any stamp duty exemption for first-time homebuyers in 2025?
Yes, first-time homebuyers purchasing properties valued up to RM500,000 can enjoy a full stamp duty exemption on both the instrument of transfer and loan agreement if the SPA is executed between January 1, 2021, and December 31, 2025. However, for properties valued between RM500,001 and RM1,000,000, the 75% exemption on the instrument of transfer was only valid for SPAs executed by December 31, 2023.
c. What are the stamp duty rates for properties in Malaysia 2025?
The rates are the same as mentioned in question 1. Refer to the tables provided in the “Stamp Duty Rates on Instruments of Transfer” section above.
d. How to calculate stamp duty on a loan agreement in Malaysia 2025?
The stamp duty on a loan agreement is generally 0.5% of the total loan amount. For example, if you take out a loan of RM450,000, the stamp duty would be RM2,250. However, certain exceptions and reduced rates may apply as mentioned in the “Stamp Duty on Loan Agreements” section.
e. Is there any change in stamp duty in Malaysia 2025?
Yes, there are several changes, including the introduction of a self-assessment system, mandatory stamping for all instruments under the Stamp Act (from 2026), increased audit powers for the IRB, revised penalty rates for late stamping, and changes to stamp duty rates for tenancy agreements.
f. What documents are subject to stamp duty in Malaysia?
Documents related to the sale, transfer, and lease of property, loan agreements, and other instruments listed in the First Schedule of the Stamp Act 1949 are subject to stamp duty. This includes Sale and Purchase Agreements (SPA), Memorandum of Transfer (MOT), Deed of Assignment (DOA), Loan Agreements, and Tenancy Agreements.
g. How to pay stamp duty online in Malaysia LHDN?
You can pay stamp duty online through the Stamp Assessment and Payment System (STAMPS) on the LHDN website (https://stamps.hasil.gov.my). You need to register as a user, log in, select the type of instrument, fill in the required information, upload supporting documents, and make the payment online.
Stamp duty is an integral part of property transactions in Malaysia. Understanding its nuances, from rates and calculations to exemptions and payment procedures, is crucial for a smooth and cost-effective property journey.
By staying informed about the latest regulations and leveraging available exemptions, you can navigate the complexities of stamp duty with confidence and make informed decisions that safeguard your financial well-being.
Remember, this guide serves as a starting point, please always consult with legal and financial professionals for personalized advice tailored to your specific circumstances.
The upcoming changes in 2025 and beyond underscore the importance of staying updated and seeking expert guidance to ensure compliance and optimize your property transactions in Malaysia.
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Citation, Reference and Related Information about Stamp Duty in Malaysia 2025
- LHDN Malaysia
2. iProperty Malaysia
- Memorandum of Transfer (MOT) and Stamp Duty in Malaysia.
- Sale and Purchase Agreement in Malaysia: What is SPA in property?
- Stamp duty and legal fees calculation for SPA when buying a house in Malaysia.
3. PwC
4. Cleartax
5. DWG Malaysia
6. 小晴天~房产报报看
7. Propertyguru Malaysia
8. The Sun
9. KPMG
