New year bring new changes to the payment of stamp duty which affects transactions involving real estate and company shares.
Two things are certain when you either dispose or acquire a property. As a seller, your disposal may attract the imposition of real property gains tax (“RPGT”) whereas as a buyer, your purchase may have to include the payment of stamp duty. The Malaysian Stamp Act 1949 and the Real Property Gains Act 1976 are the governing legislation respectively.
In a nutshell, you may be obliged to pay the stamp duty which is primarily calculated on the market value of the property at the time of the acquisition. Alternatively, you bear the payment of RPGT which is calculated on the profit gained (if any) from the disposal of your property.
In the case of a transfer of property between direct family members by way of love and affection, the law provides for a full or partial exemption of stamp duty and/or RPGT.
STAMP DUTY (Purchasers, please take note ! ) Presently, the stamp duty regime is as provided in the following table :- Consideration/ Adjudicated Value Stamp Duty rate First RM100,000 1%
Subsequent RM400,000 2%
Amount exceeding RM500,000 3%
In contrast, pursuant to the Stamp Duty (Exemption) (No. 10) Order 2007, the stamp duty exemption for a transfer of property between family members by way of love and affection are as follows:
Transferor Transferee Exemption Rate
Husband to Wife 100%
Wife to Husband 100%
Mother and/or father Child 50%
Child Mother and/or father 50%
‘Child’ means a legitimate child, a step child or child adopted in accordance with any relevant laws.
REAL PROPERTY GAINS TAX (Sellers, please take note ! )
With effect from 1 January 2019, the revised RPGT rates for the disposal of real property and shares in real property companies are as follows:
2019 RPGT Rate Date of Disposal Companies | Individual | Individual
(local/PR) (foreign)
Within 3 years 30% 30% 30%
In the 4th year 20% 20% 30%
In the 5th year 15% 15% 30%
In the 6th year and subsequent years 10% 5% 10%
Exemptions Partial or total exemption are allowed in the case of a transfer of property between family members based on love and affection as consideration in the following instances:
(a) transfers between husband and wife (total exemption);
(b) transfers between parent and child (partial exemption); and
(c) transfers between grandparent and grandchild (partial exemption)
In effect, the transferor is deemed to have received no gain and suffered no loss and the transferee is deemed to have acquired the property at an acquisition price equal to the acquisition price paid by the transferor together with any permitted expenses incurred by the transferor. This is provided for under Paragraph 12 of Section 7 to Schedule 2 of the Real Property Gains Tax Act 1976.
There are other RPGT exemptions currently in place, such as an election not to pay gains tax from the disposal of one residential property once in a lifetime to individuals. However, this is subject to the value of the property.