Basic transaction costs in Malaysia are generally low compared to its neighbour Singapore. This is a breakdown of the essential transaction fees which need to be considered when purchasing a property in Kuala Lumpur. It will be useful to know that when buying new launches, some of these fees are absorbed by developers as incentives.
The basis of determining costs is usually based on the selling price as indicated in the sales and purchase agreement.
Upon Signing Sales & Purchase Agreement
1. Legal Fees on Conveyancing
Professional fees to solicitors are payable usually upon signing the sales and purchase agreement. For new launches, this fee is commonly absorbed by developers. You may like to note that solicitors are generally representing developers and there may be conflict of interest in the event of dispute. You are advised to engage your own solicitor if this is not an option.
For the first RM 500,000 – 1% (subject to the minimum of RM 500)
For the next RM 500,000 – 0.8%
For the next RM 2 million – 0.7%
For the next RM 2 million – 0.6%
For the next RM 2.5 million – 0.5%
2. Legal Fees on Loan
This fee is only payable if you are applying for a loan facility with any banks or financial institutions.
For the first RM 500,000 – 1% (subject to the minimum of RM 500)
For the next RM 500,000 – 0.8%
For the next RM 2 million – 0.7%
For the next RM 2 million – 0.6%
For the next RM 2.5 million – 0.5%
Real Property Gains Tax (RPGT)
3. Loan Stamp Duty
Loan stamp duty is charged at 0.5% of the loan amount and only payable if purchaser is financing his/her purchase with a bank or financial institution.
4. Foreigner State Levy
This levy varies between states. In Kuala Lumpur, the amount is approximately RM 1,000.
Before Loan Disbursement
5. Loan Disbursement Fees
This fee is approximately RM 1,500 and is payable before any payment is disbursed to the developer.
Upon Vacant Possession
6. Stamp Duty on Memorandum of Transfer (MOT)
Stamp duty is probably the highest amount of tax levied on property purchases in most countries. In Singapore, the basic stamp duty payable for foreigner purchasing property above SGD 1 million is scaled at 4%. There is also the additional buyer stamp duty of 20% levied on foreign purchasers. Such fees are also payable within 14 days from the option exercise date.
In Malaysia, stamp duty on MOT is payable only when the title is issued. The final bill could take a few months from the date of vacant possession. The rate in which such fees are payable is as follows :
For the first RM 100,000 – 1%
For the next RM 500,000 – 2%
Subsequent fees – 3%
7. Assessment Tax
This tax is also known as cukai pintu. It is the equivalent of property tax payable in Singapore. The payment to this tax is made twice a year at 4% on the residential unit’s annual value or 10% on commercial units.
8. Quit Rent
This tax is similar to ground rent and is payable annually to the relevant land office. The rate is charged at RM 0.35 per square foot.
9. Maintenance Fees
This fee is payable for the management and upkeep of the common premises. The rates vary between each development. It is common for high-end branded condominiums with concierge services to be charging close to RM 1 per square foot.
Upon Disposal of Property
10. Real Property Gains Tax (RPGT)
The equivalent tax in Singapore will be known as Sellers Stamp Duty. This tax is charged on the profit gained from the disposal of property. To derive at the net chargeable gain, you will need to deduct legal fees, stamp duty, administrative fees etc. With effect from 1st January 2019, RPGT rate for non-citizens will be as follows :
Disposal less or within 3 years – 30% of net chargeable gains
Disposal within 3 to 4 years – 30% of net chargeable gains
Disposal within 4 to 5 years – 30% of net chargeable gains
Disposal more than 5 years – 10% of net chargeable gains