On 6 November 2020, the government tabled Budget 2021 in Parliament. We highlight one of the key proposals which is related to the property and real estate market.
Proposed Stamp Duty Exemption
In light of the recent Budget 2021 announcement, the stamp duty exemption limit has been increased from RM300,000 to RM500,000 (this refers to the purchase price of the property) to assist more Malaysians to own their first residential property. As the first property owner, the exemption of 100% stamp duty are given to both the instrument of transfer (also known as the MOT or DOA) and the loan agreement. Each of these instruments have different rates of stamp duty.
To illustrate:
- If you’re buying a property for RM500,000 – If you are eligible for the 100% stamp duty exemption, you will be saving stamp duty of RM9,000 max.
- If you’re obtaining a property loan of RM500,000 – If you are eligible for the 100% stamp duty exemption, you will be saving stamp duty of RM2,500 max.
- If you are a first-timer buyer purchasing a property for RM600,000 and obtaining a housing loan of RM500,000, your total stamp duty saving on both the transfer and the loan is RM9,000 + RM2,500.
This exemption will only apply to Sale and Purchase Agreements dated from 1 January 2021 and further extended until 31 December 2025.
The above, however, is subject to the actual wording of the legislative exemption order which has yet to be issued at the time of writing.
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This article was written by Shawn Ho (Partner) & Suzanne Fam (Senior Associate) from the corporate practice group of Donovan & Ho. Shawn leads the corporate practice group of Donovan & Ho, and has been recognised as a Notable Practitioner, whilst the firm has been recognised as a Notable Firm for Corporate and M&A by Asialaw Profiles 2020 and 2021. We are also ranked as a Recommended Firm by IFLR1000 2020 and 2021.
Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds. We also advise on property transactions and real-estate related tax planning. Feel free to contact us if you have any queries.
