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)
Metro Homes Iskandar Project 