WHEN you purchase a property, there are various expenses you will need to be prepared for. The initial costs will include your deposit, legal fees, memorandum of transfer (MOT) charges and stamp duty.
Stamp duty is a form of tax levied on each and every property purchase in Malaysia. It is in fact levied on every legal and financial instrument, and can be in the form of fixed duty or ad valorem duty.
In the latter, the amount of duty payable will vary on the type and value of the instrument concerned.
In Malaysia, stamp duty is usually borne by the purchaser, and the instrument has to be stamped within 30 days of execution, failing which, there will be a penalty imposed by the authorities.
In the case of properties, both the sale and purchase agreement and tenancy agreement will attract the ad valorem duty.
When you have made the decision to purchase your property, the task of sourcing for the right one begins. This can be a trying time if you are a first-time purchaser.
My advice is to secure the services of a registered estate agent. The value a good agent can bring is unparalleled.
Good agents can make the entire process simple because of the vast amount of knowledge and experience they have, having practised their trade over many years.
Many first-time house buyers make the mistake of underestimating the amount of money they need in the initial stage of purchase. They take into account money they need for their deposits, less their loan amount. They are also usually diligent about putting some aside for renovations and repairs. The trouble usually starts when they realise there are other costs associated with their purchase, the stamp duty being one of them.
The stamp duty for MOT can be pretty expensive, so it would be disastrous if the necessary funds are not set aside.
To assist first-time home buyers, the government has proposed some stamp duty exemption. For any purchase of a property that is below RM300,000, stamp duty exemption of 100 per cent will be given. If the value of the property is above RM300,000, you will get a full exemption on your first RM300,000 and will pay the prevailing stamp duty rate for the balance purchase price.
This exemption is currently applicable only for sale and purchase agreements executed between January 1 2017 to December 31 2018.
Happy hunting, and may the force be with you.