Buying your first property is an exciting experience, but it can also be a bit overwhelming due to the various fees and legal requirements involved. Here’s a simplified guide to help you understand some of the key aspects:

What Is a Sale and Purchase Agreement (SPA)?

The Sale and Purchase Agreement (SPA) is a crucial legal document between the buyer and seller. It lays out the terms and conditions of the property transaction, such as the price and any important details both parties need to know. Once both parties sign the SPA, it’s legally binding, meaning you can’t change it or back out without paying a penalty of 10% of the purchase price. Make sure you fully understand everything in the SPA before you sign it!

Understanding Stamp Duty

Stamp duty is a type of tax you pay to the government on certain legal documents, including the SPA. For property purchases, it’s important to pay the stamp duty within 30 days of signing the SPA, or you might face a penalty of 5% to 20% of the amount due. The amount of stamp duty depends on the price of the property, with rates ranging from 1% to 4%.

For example, if you buy a property worth RM500,000, you’ll pay:

• 1% on the first RM100,000 (RM1,000)
• 2% on the remaining RM400,000 (RM8,000) Total: RM9,000 in stamp duty.

Legal Fees

Legal fees cover the cost of hiring a lawyer to help with the property purchase. Your lawyer will ensure all paperwork is in order and that your rights are protected. These fees are usually a percentage of the property price and can vary depending on whether the property is under the Housing Development (Control & Licensing) Act (HDA).

Stamp Duty Exemption for First-Time Homebuyers

Good news for first-time homebuyers! The Malaysian government offers a full stamp duty exemption on properties worth RM500,000 or less until 2025. This exemption applies to both the instrument of transfer and the loan agreement, potentially saving you up to RM11,250.

Additional Costs

Besides the SPA, stamp duty, and legal fees, you might also need to pay for other costs like real estate agent commissions and administrative fees. These can add up, so it’s important to budget for them in advance.

Understanding these costs can help you better prepare for your property purchase and avoid any unpleasant surprises. Make sure to do your research and consult with a professional if needed.

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.