Property Tax In Malaysia

Malaysia Property Tax And Other Property Ownership Costs

(Useful guide for foreign buyers)

Property acquisition costs are low in Malaysia, only approximately 2.5 to 3.5% of the property purchase price.They are:

1a. Legal Fees on SPA

1b. Disbursement charges on SPA (approximately RM2,500)

2a. Legal Fees on Loan Documentations

2b. Disbursement charges on loan documentations (approximately RM2,500)

3. Stamp Duty on Loan Agreement (0.5% of loan amount)

4. State Consent Fee For Foreigners

 

1a. Legal Fees on SPA is calculated based on the table below:

 

 

Value of property / loan amount	Rate
1st RM150,000	1.00%
Next RM850,000	0.70%
Next RM2,000,000	0.60%
Next RM2,000,000	0.50%
Next RM2,000,000	0.40%
Over RM7,500,000 (negotiable)	>0.40%

 

 

1b. The disbursement charges on SPA is approximately RM2,500

 

2a. Legal Fees on Loan Documentations is calculated based on the table below:

 

 

Value of property / loan amount	Rate
1st RM150,000	1.00%
Next RM850,000	0.70%
Next RM2,000,000	0.60%
Next RM2,000,000	0.50%
Next RM2,000,000	0.40%
Over RM7,500,000 (negotiable)	>0.40%

 

 

2b. The disbursement charges on Loan Documentations is approximately RM2,500

 

3. Stamp duty on Loan Agreement is approximately 0.5% of the loan amount

 

4. State Consent For Foreigners

Foreigners are required to obtain approval from State Authorities who will consider factors such as location of the property, type of property and in some new developments the percentage of total units sold to foreigners.

Currently, these are the State Consent fees:

 

 

State	State Consent
Johor Bahru (Iskandar)	RM11,000 approximately
Kuala Lumpur	RM1,000 approximately
Penang	RM11,000 approximately

 

 

An Example

• Assumptions: a JB property of RM1 mil at 80% bank loan

 

 

No.	Acquisition Costs	Amount
1.	Legal fees on SPA	RM7,450
2.	Disbursement charges on SPA	RM2,500
3.	Legal fees on loan documentations	RM6,050
4.	Disbursement charges on loan documentations	RM2,500
5.	Stamp Duty on Loan Agreement	RM4,000
6.	State Consent	RM11,000
	Total	RM33,500

 

 

Malaysia Stamp Duty And Other Costs:

 

1. Stamp Duty for transfer of ownership title, or Memorandum of Transfer(MOT)

(Payable upon issuance of title)

• This is payable upon issuance of title, usually 2 to 5 years after the construction of the property is completed and keys are handed over

• If the original owner of the property sells it upon collection of keys before the issuance of title, the next buyer will be one paying this amount

• Rate is calculated based on the original Purchase Price

 

 

Value	Rate
1st RM100,000	1%
Next RM500,000	2%
Amount thereafter	3%

 

 

2. Malaysia Real Property Gains Tax

(Applicable upon the sale of the property)

• Effective from 1 January 2013, gains from the sale of residential properties are taxed between 0% and 15% depending on the holding period of real properties as follows:

 

 

Holding Period	RPGT Rates
Up to 2 years	15%
Exceeding 2 until 5 years	10%
Exceeding 5 years	0%

 

* Medini Special Incentive: For Foreign Knowledge Workers (FKW), Zero Real Property Gains Tax for properties in Medini Iskandar up to 2020

Note:

• Generally, sub-sale/resale of properties under construction is restricted in Johor Bahru, Kuala Lumpur and Penang
• Penang state government restricts resale / sub-sale within 3 years from date of purchase (date of Sale & Purchase Agreement)

 

Other Related Infomation:

 

Eligible Properties For Foreign Purchasers in Malaysia

Direct ownership is permitted and foreigners are eligible to purchase unlimited number of freehold or leasehold (99 years) properties of any type.

Exceptions are:

1. Properties valued below RM500,000

* Does not apply to properties in Medini, Iskandar, as this region has been granted special incentives. Therefore, foreigners can purchase properties below RM500,000 in this area

• For Penang foreigners can only pauchase properties RM1m and above

2. Land or properties with “Malay Reserved” status

* Does not apply to properties in Medini, Iskandar, as properties in this region has been granted special incentives and there is no allocated Malay Reserved quota. Therefore, properties in this area can be 100% foreigners owned

3. Agriculture land, unless purchase is over 5 acres and for commercial purposes

4. Properties assigned under the Bumiputra quota (Malays and indigenous tribes)

Some projects under construction, are required to pre-assign certain percentage of units for bumiputra, a special purchase privilege for the Malays and indigenous tribes in Malaysia.

 

Malaysia Property Maintenance Costs

1. Maintenance / Management / Service Charges:

• Calculated on per square foot basis
• Management Corp / JMB will also bill master fire insurance (once a year), sewerage charges twice a year (approx RM50 each billing)

 

2. Property Tax :

(a) Assessment Tax payable to the local council:

• Property Assessment on the value of the property is performed by the local authorities / councils. It is payable on a half yearly basis and estimated to be approximately RM400 to RM1,500 each time

 

(b) Quit Rent levied by the state government

• Payable once a year, estimated from RM100 to RM250

 

3. Income Tax (if property purchased is used for rental income)

• Non-Resident Individual Tax Rate is 26%. This is assessed on net rental income (less deductible expenses such as maintenance charges, assessment, bank interests, estate agency fees etc)

Buying Property in Malaysia

This graphic serves as a guide. Please consult your own lawyers for details. If you need good and fair lawyers, mortgage bankers or corporate secretaries to help you, do feel free to email me at valenhar@hotmail.com/wilsonchia85@yahoo.com/0167091205/0177383624

Property Tips

Q&A: How to determine a property’s value when making an offer?

Property investor and author Peter Yee answers your questions about the property market.

Q: In the course of your property investment activities, it must be very useful to know the movements of prices. How do you find out about, say, previously transacted prices or data on prices? Or do you go on gut feel for what you think a property is worth? For example, how do we really know if prices are going up or going down?

A: In property investment, it is almost impossible to know the details of all property price movements.

When you are focused in a particular territory or type of property, you will know the property price movements in your area over a period of time.

In the course of my property investment, I check property market prices in my focus area regularly from signboards, property agents, the newspapers and websites. I get to know transacted prices from my property agent, valuer and banker contacts.

Property prices are affected by depreciation/appreciation of money (Ringgit). When the real value of money (Ringgit) depreciates, the property price will increase and when the real value of money (Ringgit) appreciates, the property price will decrease.

The price of a property is also affected by economic GDP growth, employment rates, interest rates, liquidity in the financial system and sentiments.

I do not use gut feeling on a property’s worth but reasoning and a calculator. I calculate a property’s potential capital gain and rental yield.

The property’s potential capital gain is affected by the timing of entry/exit, location and usefulness of the land.

Rental yield of a building depends of its rental income and purchase price.

Rental Yield = [(Monthly rental) x 12 divided by purchase price] x 100%.

Quoted from other articles

Property and Land Taxes in Malaysia

Property and Land Taxes in Malaysia

If you are wondering what the property and land taxes are related to a house here in Malaysia, they are low compared to the US and many other places.

There are two types of property ownership in Malaysia Leasehold and Freehold. Leasehold is when you lease the land for a period of time often 99 years and then it is renewable [or not] at the end of the lease. The other is Freehold where you own the property outright. We prefer Freehold and were lucky to find a freehold property we like and could afford. For more info on freehold/leasehold check here. By the way, most properties available in KL are leasehold. Foreigners can own either Freehold or Leasehold.

There are two main costs associated with property and land ownership in Malaysia. One is called the Assessment Tax which is a tax generated twice a year by the local Majlis Perbandaran where the property is located. Assessment tax is collected by the local authorities for the ‘provision of services to the residents’. The amount and classification of properties varies from state to state and within the state. In most states the amount of the assessment tax a house owner pays is calculated on the annual value of the of the property and the annual value of the property is the total value of rents if the house is rented out in the open market. If this sounds confusing, I agree. If you want more info. you better do some googling.

The other payment is for the Quit Rent (rent is a deceiving word here) which is generated in our case by the Kerajaan Negeri Sembilan Darul Khusus. This is a once a year payment. From what I understand, Quit Rent is a form of land tax collected by the Malaysian State Governments. It is imposed on owners of all land. The amount of the quit rent varies from state to state and even within each state. For more info. check here.

1). Assessment Tax on Residential Property
The assessment tax is a local tax based on the annual rental value of the property, as assessed by the local authorities. It is generally levied at a flat rate of 6% for residential properties and payable in two installments.

2). Quit Rent
The quit rent is a local tax levied on all landed properties, payable annually at a rate of 1 sen to 2 sen per square foot, wherein RM1 is equal to 100 sen (cents). The quit rent liability is generally estimated to be less than RM100 per year.
http://www.pdtjasin.gov.my/en/online-services/e-calculator/computation-of-yearly-land-tax-rate.html
For Examole, the bungalow( has a Quit Rent cost of 218 RM per year and a Assessment cost of 780 RM total per year. therefore, you may have rough idea about your property.

Real Property Gains Tax

Disposals of Malaysian real property held for less than two years are subject to real property gains tax (RPGT) at a flat rate of 10%. Disposals of Malaysian real property held for less than five years but more than two years are subject to real property gains tax (RPGT) at a flat rate of 5%. No real property gains tax (RPGT) is levied on disposals of properties held for more than five years.

REAL PROPERTY GAINS 2012
OWNERSHIP PERIOD

TAX RATE
Up to 2 years 10%
2 years – 5 years 5%
Over 5% 0%
Source: Global Property Guide

Stamp Duty

When purchasing a property, stamp duty must be paid on the Memorandum of Transfer. Stamp duty is based on the purchase price:
•For the first RM 100,000, stamp duty is one percent
•For the next RM 400,000, stamp duty is two percent
•Anything over RM 500,000, stamp duty is three percent

There are penalties for the late payment of stamp duty.