Understanding Stamp Duty in 2021


Finding your dream home will always be an important memory, especially for the first-time homebuyers. However, you can’t overlook the stamp duty, an unavoidable cost in real estate purchases.

The stamp duty is the tax placed on your property documents during the sale or transfer of the property – as specified under the First Schedule of Stamp Duty Act 1949.

How about we look through the 5 top questions regarding stamp duty to help you make that dream home a reality. 

1. What is Stamp Duty?

The stamp duties concept is a form of a written document and not a transaction – levied on legal, commercial and financial instruments. Any individual who needs to pay the stamp duty is based on the Third Schedule of Stamp Act 1949.

Did you know there are two types of stamp duty; Ad Valorem Duty and Fixed Duty?

  • Ad Valorem Duty – is the rate of duty varies according to the instruments’ nature and the consideration stipulated in the instruments or the property’s market value.
  • Fixed Duty Duty – is imposed without any relation to the consideration paid or amount stated in the instrument.

What about the rate of the Stamp Duty?

The tax rate charged is dependable to the First Schedule of the Stamp Act 1949.

What does the date of valuation have to do with Stamp Duty?

The date of valuation is the date of execution of the Sale and Purchase Agreement. Otherwise, it is the date of execution of the instrument of transfer.

2. Could you show me how does Stamp Duty work?

The workings of the stamp duty are tax based on specific tiers, with its own percentage for each level;

A property valued at RM500,000 today would be liable for charges across the first two tiers in layman terms.

So how would the calculations look like regarding stamp duty? Let’s look at another example below;

3. How does it work if I wish to apply for a loan of agreement?

While the Stamp Duty’s concept is used to sell and transfer any property, it also applies on any loan of agreements – a flat 0.5% rate applied on the full loan value.

Take this as an example – you wished to purchase a property about RM400,000, and you are applied for a 90% loan (RM350,000) – as 10% of the property price will be for the downpayment. 

If you take out a loan of RM350,000 to cover your purchase, you will receive a stamp duty of RM1,750 (0.5% x RM350,000) on that loan.

Next time, remember this formula for the next future purchase;

Stamp Duty for Instrument of Transfer + Stamp Duty on Loan Agreement = Total Stamp Duty to be Paid.

4. I heard a change regarding new home buyers from the Budget 2021 announcement?

According to the Budget 2021 announcement of last year;

  • Full stamp duty exemption on Memorandum of Transfer (MOT) and loan agreement for the first home priced below RM500,000 – from January 2021 to December 2025.
  • The stamp duty exemption extension on loan agreement and MOT was given to rescue contractors and original buyers of abandoned houses for another 5 years. This exemption is effective for the loan agreements and MOT executed from January 2021 to December 2025 for abandoned housing projects certified by the Ministry of Housing and Local Government (KPKT).

5. How will aid by the government help in the real estate industry?

As of January 18 2021, the Prime Minister Tan Sri Muhyiddin Yassin announced the “Perlindungan Ekonomi dan Rakyat Malaysia” (PERMAI) assistance package worth 15 billion Malaysia Ringgit.

A total of 22 initiatives will be implemented under PERMAI, anchored on three main objectives; combating the COVID-19 outbreak, safeguarding the people’s welfare, and supporting the business continuity.

As a homebuyer, investor or a person of interest in the real estate industry, here are a few aids that would help you along the way;

  • Moratorium facility, including an extension of the moratorium and restructuring of loan repayment, will continue to be offered by banks.
  • Credit counselling to be given by phone and online.
  • Tax exemptions for computers, handphones, and tablets worth below RM2,500 to be extended until Dec 31, 2021.
  • Free 1 Gigabit data initiative will be extended until the end of April 2021.
  • The wage subsidy programme 3.0 under Socso will be enhanced – all employers operating in the MCO states will be eligible to apply, irrespective of sector.
  • Government to expand the Prihatin Special Grant Plus assistance to cover 500,000 SMEs in the seven MCO states with a payment of RM1,000 each, while 300,000 SMEs in other states will receive RM500 each.
  • Electricity rebates to all TNB users, domestic and non-domestic at a rate of two sen per kilowatt-hour, which is equivalent to a reduction in electricity bills of up to 9% for a period of six months, from Jan 1 to June 30, 2021.
  • Government agrees to extend the effective period of inability to perform contractual obligations to March 31, 2021, under the Temporary Measures for Reducing the Impact of Covid-19 Act 2020, or Act 82.


Ready to bring out the calculator and visit JPPH?

We hoped our simple crash course helped you understand a more in-depth what stamp duty is all about. 

Before finalizing your home purchase, have a visit to the Valuation and Property Services Department (JPPH), with the listed documents you need to submit;

  • A complete form of PDF 15.
  • Copy of the Sale and Purchase Agreement, if relevant.
  • Copy of the Document of Title, for inspection purposes.

All Stamp Duty valuations shall be reported for clients within one working for standard case and five working days for non-standard cases from the office’s receipt date.

For online enquiries, users can check their status of the case via;

Website Link – http://www.jpph.gov.my

Text Message [15888] – Type JPPH <space> DUTISETEM <space> Adjudication No. <space> Email 

If you have any objection on the property’s valuation, it must be directed to the SDO with a copy sent to the JPPH.

Article by: IQI Global

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