Purchasing a property in Malaysia is more than just finding the perfect home and placing a downpayment. Whether it’s a dream home or a smart investment, understanding some of the legalities involved will undoubtedly help safeguard any unexpected expenditure.
One of the biggest things that often catches new buyers off guard is stamp duty.
Now, understanding it is crucial as it is one of the main costs involved in any property transaction. If you’re confused about what it is, how much it costs, or whether you qualify for any exemptions, don’t worry — you’ve come to the right place.
What Is Stamp Duty?
In layman terms, stamp duty is a tax levied by the government on property purchases. The stamp duty validates the purchase, legally binding and ensuring the rights of all parties involved when buying or transferring ownership of a property.
Based on the Malaysian Stamp Act 1949, owners will have to pay stamp duty on the Sale and Purchase Agreement (SPA) of the property – a flat rate of RM10.
If you’re taking a mortgage (like most of us), your loan agreement is also subject to stamp duty, which is 0.5% of your loan amount. For a property valued at RM750,000, if you borrow RM675,000 (which is 90% of the amount), you’ll have to fork over RM3,375 in stamp duty for the loan agreement.
However, owners also pay stamp duty on the Instrument of Transfer/Memorandum of Transfer (the document that officially transfers ownership to you) and on your loan agreement.
Also note, the stamp duty on the MoT isn’t a flat rate. It’s tiered based on how much your property is worth (ad valorem), and calculated based on the purchase price (or market value, whichever is higher), using tiered rates from 1% to 4%.
Stamp Duty Rates For 2025 (Based On Property’s Value)
| Property Value Tier (RM) | Stamp Duty Rate (%) | Fee |
|---|---|---|
| First RM100,000 | 1% | RM1,000 |
| Next RM400,000 (RM100,001 – RM500,000) |
2% | RM8,000 |
| Next RM500,000 (RM500,001 – RM1,000,000) |
3% | RM15,000 |
| RM1,000,001 and above | 4% | Continues at 4% beyond RM1 million |
How To Calculate Stamp Duty On Memorandum Of Transfer
Based on the rates above, if you’re buying a property valued at RM750,000, this is how to calculate the stamp duty for MoT.
Example of Stamp Duty Effective Calculation
| Portion of Value | Rate | Calculation | Amount |
|---|---|---|---|
| First RM100,000 | 1% | RM100,000 × 1% | RM1,000 |
| Next RM400,000 | 2% | RM400,000 × 2% | RM8,000 |
| Next RM250,000 | 3% | RM250,000 × 3% | RM7,500 |
| Total Stamp Duty For MoT | RM16,500 | ||
In total, you will have to pay a stamp duty of RM16,500 on the property, along with RM10 for the SPA and not forgetting the 0.5% stamp duty on your loan/mortgage amount as well.
Total Stamp Duty Amount To Purchase Property
Altogether, the total stamp duty to be paid can be calculated as such:
| Type Of Stamp Duty | Amount | Amount Based On Property Value Of RM750,000 |
| SPA | RM10 | RM10 |
| Loan Agreement | 0.5% of the loan amount | RM3,375 |
| MoT | 1% – 4% of the property’s value | RM16,500 |
| Total Stamp Duty | RM19,885 | |
Yes, it does add up pretty fast. But there are exemptions and it pays to know what they are.
Stamp Duty Exemptions For First-Time Homebuyers
If you’re buying your first home, you will get a first-time buyer stamp duty exemption of 100% for properties valued up to RM500,000 (based on the 2024 National Budget– valid until the end of 2025). To qualify, owners must be Malaysian citizens obtaining their first residential property with the SPA dated before 31 December 2025.
Real estate transfers between family members are also subjected to exemptions. For transfers between a parent and child, and a grandparent and grandchild, a full stamp duty exemption of the first RM1mil of the value is given, with a 50% remission on the remaining value of the property. This exemption is only applicable to Malaysian citizens.
How Do You Pay Stamp Duty?
Well, normally your lawyer or conveyancer handles it. But essentially, it involves the preparation of documents and submission to the LHDN (Inland Revenue Board). You may pay the stamp duty online through the Stamp Assessment and Payment System (STAMPS) on the LHDN website.
Not to forget, payment is required within 30 days of the signing of the SPA or you may risk a penalty as follows:
LHDN Stamp Duty Late Payment Penalty (Effective 1 Jan 2025)
| Delay Period | Penalty |
|---|---|
| Within 3 months | RM50 or 10% of the deficient duty, whichever is higher |
| After 3 months | RM100 or 20% of the deficient duty, whichever is higher |
Remember, stamp duty isn’t optional — and it can be a chunk of cash. Make sure it’s included in your home-buying budget, and if you’re a first-time buyer, take advantage of the exemptions while they last. After all, being in the know not only helps make your real estate journey a pleasant one but it can also translate to valuable savings along the way.