When engaging a lawyer to handle property transactions or transfers, many people are informed about the need to pay Stamp Duty and/or Real Property Gains Tax (”RPGT”) to the ‘Lembaga Hasil Dalam Negeri Malaysia’/Inland Revenue Board of Malaysia. What are the differences between the 2? How are they calculated? Under what circumstances can you be exempted from Stamp Duty and/or RPGT?
Stamp Duty is a type of tax the Donee/Transferee must pay when acquiring the property. On the other hand, if the property is sold at a profit, the Donor/Transferor is required by law to pay RPGT.
The stamp duty is calculated based on the market value of the property at the time of purchase:
| Property Value | Rate |
| First RM100,000 | 1％ |
| Next RM400,000 | 2％ |
| Amount exceeding RM500,000 | 3％ |
RPGT is calculated based on the profit gained from the sale of the property:
| Disposal Period | Companies | Citizens and/or Permanent Residents | Non-Citizens |
| Within 3 years of purchase | 30% | 30% | 30% |
| In the 4th year | 20% | 20% | 30% |
| In the 5th year | 15% | 15% | 30% |
| In the 6th year and beyond | 10% | 5% | 10% |
Exemptions for Stamp Duty:
Under the Stamp Duty (Exemption) Order 2007, transfers of property between spouses and children are fully exempt from Stamp Duty.
TAKE NOTE it is not applicable to Foreigners.
|
Type of Transfer |
Exemption |
| Between Spouses | 100％ |
| Between Parents and Children | 100％ |
TAKE NOTE “children” refers to legitimate children, stepchildren, or adopted children under any law. Additionally, unless otherwise agreed, stamp duty is typically borne by the transferee.
Exemptions for RPGT:
RPGT does not apply to property transfers between family members in the following cases:
(a) Transfers between spouses;
(b) Transfers between parents and children; and
(c) Transfers between grandparents and grandchildren.
TAKE NOTE it is not applicable to Foreigners.
Furthermore, every Malaysian is entitled to apply for an RPGT exemption once in their lifetime. This exemption is limited to residential properties and must be applied for through a lawyer.
Disclaimer: The information provided is for general purposes only. ANN & AIN, ADVOCATES & SOLICITORS make no representations or warranties regarding the accuracy or fitness of the information for any particular purpose. While we have made every effort to ensure the information is accurate as of the time of writing, it should not be relied upon for making any financial, investment, real estate, or legal decisions. Always seek professional advice that considers your personal circumstances.
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