28 October, 2017
Introduction
With the introduction of the Stamp Duty (Remission) Order 2016 and Stamp Duty (Remission) (No 2) Order 2016, first time home buyers are entitled to a remission of up to 100% of the stamp duty chargeable on the instrument of transfer and loan agreement, subject to the stipulated requirements. Both the Orders came into effect on 1 January 2017[1], and are applicable where a sale and purchase agreement is executed on or after 1 January 2017 but not later than 31 December 2018[2].
Stamp Duty (Remission) Order 2016
The Stamp Duty (Remission) Order 2016 provides for the remission of the stamp duty chargeable on any instrument of transfer for the purchase of only one unit of residential property the value of which is not more than RM500,000.00, subject to the stipulated conditions[3].
Conditions
The conditions to be fulfilled for the remission of the stamp duty chargeable on the instrument of transfer are provided in Paragraph 2 of the Stamp Duty (Remission) Order 2016:
“2.(1) An amount according to the value of residential property as specified in the Schedule shall be remitted from the stamp duty chargeable on any instrument of transfer for the purchase of only one unit of residential property the value of which is not more than five hundred thousand ringgit (RM500,000.00) by an individual who is a Malaysian citizen provided that –
- the sale and purchase agreement for the purchase of the residential property is executed on or after 1 January 2017 but not later than 31 December 2018; and
- the individual has never owned any residential property including a residential property which is obtained by way of inheritance or gift, which is held either individually or jointly.”[4]
The value of the residential property shall be based on the market value[5]. For the purposes of the Order, “residential property” means a house, a condominium unit, an apartment or a flat purchased or obtained solely to be used as a dwelling house and “individual” means a purchaser or co-purchasers[6].
Statutory declaration is required
A statutory declaration under the Statutory Declarations Act 1960 [Act 13] is necessary to support the application for the remission of the stamp duty. The statutory declaration shall be made by the individual referred to in Paragraph 2(1) of the Stamp Duty (Remission) Order 2016 to confirm that the individual has never owned any residential property including a residential property which is obtained by way of inheritance or gift, which is held either individually or jointly[7].
Amount remitted from the stamp duty
As mentioned earlier, an amount according to the value of residential property as specified in the Schedule shall be remitted from the stamp duty chargeable on the instrument of transfer for the purchase of only one unit of residential property the value of which is not more than five hundred thousand ringgit (RM500,000.00). The Schedule states as follows:
SCHEDULE[8]
| Value of the residential property |
Amount remitted |
| RM300,000.00 or less |
100% |
| More than RM300,000.00 until RM500,000.00 |
RM5,000.00 from the total amount of stamp duty chargeable |
Example of calculations of the stamp duty payable on the instrument of transfer with remission of stamp duty
Value of the residential property: RM400,000.00
The rates of the stamp duty are as follows[9]:
For every RM100 or fractional part of RM100 of the amount of the money value of the consideration or the market value of the property, whichever is the greater-
RM1.00 on the first RM100,000;
RM2.00 on any amount in excess of RM100,000 but not exceeding RM500,000;
RM3.00 on any amount in excess of RM500,000.
Calculation of the stamp duty chargeable:
| First RM100,000.00 | RM1.00 x RM100,000.00 ÷ RM100.00 =RM1,000.00 |
| Balance RM300,000.00 | RM2.00 x RM300,000.00 ÷ RM100.00 =RM6,000.00 |
| Total stamp duty chargeable | RM1,000.00 + RM6,000.00 = RM7,000.00 |
Total stamp duty payable:
= Total stamp duty chargeable – Amount remitted
= RM7,000 – RM2,000
= RM5,000
Stamp Duty (Remission) (No 2) Order 2016
The Stamp Duty (Remission) (No. 2) Order 2016 provides for the remission of the stamp duty chargeable on any loan agreement to finance the purchase of only one unit of residential property the value of which is not more than RM500,000.00, subject to the stipulated conditions[10].
Conditions
The conditions to be fulfilled for the remission of the stamp duty chargeable on the loan agreement are stated in Paragraph 2 of the Stamp Duty (Remission) (No. 2) Order 2016:
- “2.(1) An amount according to the loan amount as specified in the Schedule shall be remitted from the stamp duty chargeable on any loan agreement to finance the purchase of only one unit of residential property the value of which is not more than five hundred thousand ringgit (RM500,000.00) executed between an individual who is a Malaysian citizen named in the sale and purchase agreement and –
- a licensed bank under the Financial Services Act 2013 [Act 758];
- a licensed Islamic bank under the Islamic Financial Services Act 2013 [Act 759];
- a development financial institution prescribed under the Development Financial Institutions Act 2002 [Act 618];
- a licensed insurer under the Financial Services Act 2013;
- a licensed takaful operator under the Islamic Financial Services Act 2013;
- a co-operative society registered under the Co-operative Societies Act 1993 [Act 502];
- any employer who provides an employee housing loan scheme;
- the Malaysian Building Society Berhad incorporated under the Companies Act 1965 [Act 125]; or
- the Borneo Housing Mortgage Finance Berhad incorporated under the Companies Act 1965.
- (2) The remission of the stamp duty under subparagraph (1) shall only apply if –
- the sale and purchase agreement for the purchase of the residential property is executed on or after 1 January 2017 but not later than 31 December 2018; and
- the individual has never owned any residential property including a residential property which is obtained by way of inheritance or gift, which is held either individually or jointly.” [11]
For the purposes of this Order, “residential property” means a house, a condominium unit, an apartment or a flat purchased or obtained solely to be used as a dwelling house and “individual” means a purchaser or co-purchasers[12].
Statutory Declaration is required
The application for the remission of the stamp duty shall be accompanied by a statutory declaration under the Statutory Declarations Act 1960 [Act 13] by the individual referred to in Paragraph 2(1) of the Stamp Duty (Remission) (No 2) Order 2016 confirming that the individual has never owned any residential property including a residential property which is obtained by way of inheritance or gift, which is held either individually or jointly[13].
Amount remitted from the stamp duty
An amount based on the loan amount as specified in the Schedule shall be remitted from the stamp duty chargeable on any loan agreement to finance the purchase of only one unit of residential property the value of which is not more than RM500,000.00. The Schedule states as follows:
SCHEDULE[14]
| Loan amount |
Amount remitted |
| RM300,000.00 or less |
100% |
| More than RM300,000.00 until RM500,000.00 |
RM1,500.00 from the total amount of stamp duty chargeable |
Example of calculations of the stamp duty payable on the loan agreement with remission of stamp duty
Loan amount: RM400,000.00
The rate of the stamp duty is as follows[15]:-
For each RM1,000 or part thereof RM5.00
Calculation of the stamp duty chargeable:
| RM400,000.00 | RM5.00 x RM400,000.00 ÷ RM1000.00 = RM2,000.00 |
| Total stamp duty chargeable | RM2,000.00 |
Total stamp duty payable:
= Total stamp duty chargeable – Amount remitted
= RM2,000.00 – RM1,500.00
= RM500.00
Conclusion
For first time buyers, the cost of owning a first home is reduced by the remission of the stamp duty chargeable on the instrument of transfer and loan agreement, subject to the stipulated requirements as provided in the Stamp Duty (Remission) Order 2016 and Stamp Duty (Remission) (No 2) Order 2016.
[1] Paragraph 1 of the Stamp Duty (Remission) Order 2016 and Paragraph 1 of the Stamp Duty (Remission) (No 2) Order 2016.
[2] Paragraph 2(1)(a) of the Stamp Duty (Remission) Order 2016 and Paragraph 2(2)(a) of the Stamp Duty (Remission) (No 2) Order 2016.
[3] Paragraph 2 of the Stamp Duty (Remission) Order 2016.
[4] Paragraph 2(1) of the Stamp Duty (Remission) Order 2016.
[5] Paragraph 2(2) of the Stamp Duty (Remission) Order 2016.
[6] Paragraph 2(4) of the Stamp Duty (Remission) Order 2016.
[7] Paragraph 2(3) of the Stamp Duty (Remission) Order 2016.
[8] Supra n 3.
[9] Item 32 in the First Schedule, Stamp Act 1949.
[10] Paragraph 2 of the Stamp Duty (Remission) (No 2) Order 2016.
[11] Paragraph 2(1) and Paragraph 2(2) of the Stamp Duty (Remission) (No 2) Order 2016.
[12] Paragraph 2(4) of the Stamp Duty (Remission) (No 2) Order 2016.
[13] Paragraph 2(3) of the Stamp Duty (Remission) (No 2) Order 2016.
[14] Supra n 9.
[15] Item 27 in the First Schedule, Stamp Act 1949
For further information, please contact:
Sar Sau Yee, Partner, Shearn Delamore & Co
sysar@shearndelamore.com
