What is Stamp Duty?
According to Lembaga Hasil Dalam Negeri, stamp duties are imposed on instruments and not transactions. An instrument is defined as any written document and in general,- stamp duty is levied on legal, commercial and financial instruments.
Many property buyers are aware about stamp duty exemption for residential property when the government unveiled Pelan Jana Semula Ekonomi or best known PENJANA to reintroduce the Home Ownership Campaign (HOC). Full stamp duty exemption will be given under HOC to both instruments of transfer and loan agreement with the condition stated. However, this does not apply to industrial and commercial property buyers.
Types of Duty
Stamp duty is divided into 2 categories:
Ad Valorem Duties (The rate of duty varies according to the nature of the instruments and the consideration stipulated in the instruments or the market value of the property)
Fixed Duties (Charged at a set price, include stamps for individual policies or copies)
Ad Valorem Duties will be imposed on:
Instrument of transfer of property
Instrument creating interest in property. For example, tenancies and statutory leases
The Buyer or Purchaser is liable to pay the stamp duty.
How to Calculate Stamp Duty Based on Instrument of Transfer?
It is taxed based on different tiers. For instance, a detached factory for sale at a price of RM50 Mil. Below is the detail of stamp duty calculation:
So what will the stamp duty be? Thus, RM 1,000 + RM 8,000 + RM 15,000 + RM 1,960,000 = RM1,984,000 stamp duty owed in total.
Loan Agreement
Next, stamp duty is based on loan agreement. Flat rate 0.5% of stamp duty on a loan agreement.
Thus, based on the RM 50 Mil factory above, you may get up to 85% loan.
85% of RM 50 Mil = RM 42.5 Mil
Total of stamp duty based on loan agreement: RM 42,5 Mil * 0.5% = RM 212,500
Total stamp duty to be paid:
=Stamp duty for instrument of transfer + Stamp duty on loan agreement
=RM 1,984,000 + RM 212,500
=RM 2,196,500
Beside stamp duty, commercial property investors should be aware of other costs or fees that will be incurred as well. For instance, legal fees, real estate agents, property valuers, and Real Property Gain Tax (RPGT).
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