According to the regulation Stamp Act 1949 in Malaysia, stamp duty collection is by instrument but not by transaction. The instrument is to represent documents, as long as the document would have the following characteristics, it required to pay stamp duty:

 i). Instrument of Transfer
ii). Instrument creating interest in property
iii). Instrument of Security for monies 
iv). Capital Market Instrument. 

In Malaysia, when I apply loan from bank to purchase any property, the whole process of buying require to pay stamp duty up to 5 times. Actually, this acquisition cost is quite high if I like to own a real estate/ property in Malaysia. Let’s me share one by one today all the stamp duty that require to pay.

This scenario assumptions set as below:-
1) Agreed sale price at RM 600,000.
2) Sales price same as the bank value.
3) 90% of the MOF.

In order to avoid deposit forfeit if I fail to apply my loan from bank, I usually will add in the statement below in the Offer to Purchase form.
• If I can not get 90% of the MOF, I can cancel the transaction and receive a full refund.

Anyway, this statement need to be agree by the owner.

The first stamp duty:

When I pay the cheque for 3% Ernest Deposit, I’ll bring the Offer to Purchase and proof of income documents to bank for apply loan. If I can get the loan amount I request, the bank will ask me to accept mortgage applications and ask me to sign Letter of Offer (LO). Due to this document file under Instrument of Security for monies, it is necessary to pay stamp duty. This stamp duty is cost RM 10 only.

The second stamp duty:

Next, after my mortgage was approved for my property purchase, I can go into the second stage. That is sign the Sales and Purchase Agreement (SPA) and the payment is 10% of purchase price. Since this document file under Instrument creating interest in property, I must pay stamp duty cost RM 10 only.

The third stamp duty:

During the third phase, I require to sign the Loan Agreement (LA) or before called L.O which is to accept the amount of bank loan and no of years. This L. A is a formal acceptance of all the terms of borrowing and mortgage the house to the bank as guarantee. Due to this document under Instrument of Security for monies, it is necessary to pay stamp duty which cost RM10 only.

The fourth stamp duty:

The fourth stage is Land Office transfer name procedure which we often hear about Memorandum of Transfer (MOT). Since this document under Instrument of Transfer, it require to pay stamp duty. This time, the cost of stamp duty is most highest during the whole buying process. This calculation is based on the Malaysia Stamp Act 1949, 1st schedule item 32 (a) as follows:

The first RM 100k,  levy 1% of stamp duty
The next RM 400k, levy 2% of stamp duty
More than RM 500k, levy 3% of stamp duty

For example, if the purchase price of real estate value RM 600K and according to the above rules and regulations that impose stamp duty. I have to pay stamp duty as below:-
The first RM 100k, 1% stamp duty x RM100k = RM 1,000
The next RM 400k, 2% stamp duty x RM400k= RM 8,000
More than RM 500k, 3% stamp duty x RM100K = RM 3,000
The total stamp duty= RM12,000

The fifth stamp duty:

The fifth stamp duty is because I get loan from bank and this document under Instrument of Security for monies, it is necessary to pay stamp duty. This stamp duty calculation is base on Malaysian Stamp Act 1949, 1st schedule item 32 (a) where every RM1,000 loan that I get, I need to pay stamp duty of RM 5.

For example, if I purchase a real estate as below:-

Purchase value=RM600K
90% Margin of finance (MOF)=RM540k
Stamp Duty=RM540k x RM5 =RM2700

All the stamp duty above are original documents and if require a copy, it will cost additional RM10 per copy according to Section 4, Stamp Act 1949 regulation.

With the sharing above, I hope that all the investors can know more about the stamp duty and be prepare for this cost. Let’s be smart in property investment and blessing you all !