Stamp Duty on Sales and Purchase Agreement: What You Need to Know
If you`re looking to purchase or sell a property in Malaysia, you will need to understand the concept of stamp duty. Stamp duty is a tax that is imposed on certain legal documents, including a sales and purchase agreement, as mandated by the Malaysian government. In this article, we will discuss what stamp duty is, why it is necessary, and how it affects your property transactions.
What is Stamp Duty?
Stamp duty is a tax that is levied on various legal documents to give them legal status. This tax is collected by the Malaysian Inland Revenue Board (LHDN). In the context of property transactions, stamp duty is charged on documents, such as the sales and purchase agreement, that transfer ownership of a property from the seller to the buyer.
Why is Stamp Duty Necessary?
The purpose of stamp duty is to ensure that legal documents are properly executed and registered. It serves as proof that the necessary legal procedures have been followed and that the transaction is legally binding. It also helps to generate revenue for the government, which can be used for various purposes, such as funding public services.
How Much Stamp Duty is Required for a Sales and Purchase Agreement?
The amount of stamp duty payable for a sales and purchase agreement is based on the purchase price of the property. This fee is calculated in accordance with the Stamp Duty Act 1949. The current rates for stamp duty on sales and purchase agreements are as follows:
– For the first RM100,000 of the purchase price, the stamp duty rate is 1%.
– For the next RM400,000 of the purchase price, the stamp duty rate is 2%.
– For any amount above RM500,000, the stamp duty rate is 3%.
For example, if you purchase a property for RM600,000, the stamp duty payable for the sales and purchase agreement would be calculated as follows:
– The first RM100,000 would be charged at 1%, which would be RM1,000.
– The next RM400,000 would be charged at 2%, which would be RM8,000.
– The remaining RM100,000 (the amount above RM500,000) would be charged at 3%, which would be RM3,000.
Therefore, the total amount of stamp duty payable would be RM12,000.
When is Stamp Duty Payable?
Stamp duty must be paid within 30 days from the date of a document`s execution. Failure to pay stamp duty within the stipulated timeframe may result in the imposition of late payment fees, penalties, and legal action.
Conclusion
Stamp duty is a crucial aspect of any property transaction in Malaysia. It serves as proof that the necessary legal procedures have been followed and that the transaction is legally binding. As a buyer or seller, it is essential to be aware of the stamp duty rates and payment deadlines to avoid any unnecessary delays or costs. If you have any doubts or questions regarding stamp duty, it is always advisable to seek professional legal advice.