Guide to Property Purchase Costs in Malaysia
Buying a property in Malaysia involves several legal and financial steps. Below is a breakdown of the main costs, including the memorandum of transfer (MOT) and stamp duty, as well as additional charges for foreign buyers.
1. Memorandum of Transfer (MOT) – Key Points
- Legal document to transfer property ownership from seller to buyer.
- Required to register the buyer’s name on the land title.
- Also known as Form 14A.
When is MOT Used?
- Primary market (new property) – Signed after the individual/strata title is issued.
- Secondary market (resale property) – Signed during the sale process, often when the SPA and loan documents are signed.
- Foreign Buyers – Must comply with state-specific regulations (higher stamp duty & approval needed).
- Between family members where no money exchange is involved, SPA is not needed.
MOT Process
- Lawyer prepares Form 14A (with seller & buyer details).
- Stamp duty is paid (higher rates apply for foreigners).
- Submit the title update to the land office.
- Cash buyers typically obtain legal/vacant possession first before the title is registered in their name, if the title has been issued.
- Loan buyers typically have the title registered in their name before or upon taking legal/vacant possession, if the title has been issued.
Note: If the strata title has not been issued, the transfer will be done using the deed of assignment (DOA). The buyer needs to pay ad valorem stamp duty on the MOT or DOA (Ref 5). There is a nominal stamp duty on every copy of the SPA.
2. Breakdown of Property Purchase Costs
A) Legal & Documentation Fees
| Cost Type | Fee Structure |
|---|---|
| Sale & Purchase Agreement (SPA) Legal Fee | 1.25% (first RM500k), 1% (next RM7mil), excess above RM7mil~ 1% Min fee (RM500) |
| Loan Agreement Legal Fee | Same scale as SPA legal fees |
When the buyer signs the loan documents, the bank will register a charge over the property. A small fee may apply for the memorandum of charge. Always check the exact costs with your lawyer.
B) Stamp Duty (Tax on Property Transactions)
1. Stamp Duty on MOT (Property Price – RM1,000,000)
| Price Tier | Stamp Duty Rate | Calculation (RM) |
|---|---|---|
| First RM100,000 | 1% | RM1,000 |
| Next RM400,000 (RM101k–RM500k) | 2% | RM8,000 |
| Next RM500,000 (RM500k–RM1 mil) | 3% | RM15,000 |
| Total Stamp Duty (Local Buyer) | RM24,000 |
If the property price is above RM1,000,000, add 4% for any amount exceeding RM1,000,000. Please note that a flat rate of 4% applies to property transfers for foreign buyers.
2. Stamp Duty on Loan Agreement
- 0.5% of the total loan amount
- Example (RM800,000 loan): RM4,000
3. Stamp Duty Exemptions (2024 Updates)
First-time homebuyers (locals only) get full stamp duty exemption for properties ≤ RM500,000 until the end of 2025. There are stamp duty exemptions for transfers between family members (ref 4). There are no exemptions from stamp duty for foreign buyers.
C) Other Costs
| Cost Type | Scale Fee |
|---|---|
| Valuation Fee | 0.25% (first RM100K), 0.20% (next RM2mil), 0.167% (next RM7mil), 0.10% (next RM50mil) |
| Real Property Gains Tax (RPGT) | For local sellers: 30% (within 3 years), 20% (4th year), 15% (5th year), 0% (6th year and beyond) For foreign sellers: 30% flat for disposal within 5 years and 10% in the 6th year and beyond |
| Agent Commission | Normally 2% to 3% paid by the seller |
| Land Search & Registration | Varies depending on the state |
| Disbursement Fees (Lawyer) | Varies upon costs incurred |
| Foreign Buyer Approval Fee (FIC approval) | Application fee applies. No fixed scale |
3. Summary of Costs for Purchase of a Property
For Local Buyers
| Expense |
|---|
| SPA Legal Fee |
| Loan Legal Fee |
| Memorandum of Charge (MOC) |
| Stamp Duty (MOT) |
| Valuation Fee |
| Disbursements (Legal) |
| Miscellaneous Fees |
The costs for foreign buyers are generally higher, primarily because of the stamp duty (MOT). While cash buyers are not required to obtain a valuation, it is recommended to do so before purchasing a property.
References:
1. https://www.hasil.gov.my/stamp-duty-calculator
2. https://www.hasil.gov.my/stamp-duty/exemptions
3.Property Title Transfer Process in Malaysia: A Comprehensive Guide
4.2024 Stamp Duty Exemptions in Malaysia: Your Ultimate Guide to Saving on Property Transactions
5 Stamp Duty Imposed For Transfer Of Properties In Malaysia by TYH & Co..
