Sales and Purchase Agreement Stamping Fee: What You Need to Know
If you are purchasing a property in Malaysia, it is important to understand the concept of a Sales and Purchase Agreement (SPA) and the associated stamping fee. In this article, we will explore what an SPA is, what the stamping fee entails, and what you need to know as a buyer.
What is a Sales and Purchase Agreement?
Simply put, an SPA is a legal contract between a buyer and seller of a property that outlines the terms and conditions of the sale. It serves as proof of ownership and protects both parties’ interests by setting out the agreed-upon terms of the sale.
The SPA typically includes details such as the purchase price, payment details, property description, and other relevant information. It also outlines the seller’s obligations, such as delivering the property in its current condition, and the buyer’s responsibilities, such as paying the agreed-upon price.
What is the Stamping Fee for a Sales and Purchase Agreement?
In Malaysia, all legal documents, including SPAs, must be stamped by the Inland Revenue Board (LHDN) to be legally enforceable. The stamp duty payable for an SPA is based on the purchase price of the property and is calculated as follows:
– For the first RM100,000 of the purchase price, the stamp duty is 1%
– For the next RM400,000, the stamp duty is 2%
– For the next RM1.5 million, the stamp duty is 3%
– For the next RM2.5 million, the stamp duty is 4%
– For any amount above RM4 million, the stamp duty is 5%
For example, let’s say you are purchasing a property for RM500,000. The stamp duty payable would be calculated as follows:
– First RM100,000: RM1,000 (1%)
– Next RM400,000: RM8,000 (2%)
– Total stamp duty payable: RM9,000
It is important to note that the stamp duty for an SPA is a one-time fee. Once it has been paid, the SPA can be legally enforced for as long as it remains valid.
What You Need to Know as a Buyer
As a buyer, it is important to factor in the stamp duty when budgeting for your property purchase. It can be a significant cost, especially for high-end properties, and should be taken into consideration when assessing the overall affordability of a property.
It is also important to ensure that the SPA is stamped promptly after it is signed. Failure to do so can result in penalties and may make the SPA invalid.
In addition, it is worth noting that exemptions or discounts may be available in certain circumstances. For example, first-time homebuyers are eligible for a partial exemption on the stamp duty payable for their first residential property purchase.
In conclusion, understanding the sales and purchase agreement stamping fee is an important aspect of purchasing property in Malaysia. As a buyer, be sure to factor in the stamp duty when budgeting for your purchase and ensure that the SPA is stamped promptly after it is signed. By doing so, you can protect your interests and ensure a smooth and legal property transaction.