Upfront Costs & Exemptions for First-Time Home Buyers in Malaysia: Stamp Duty

A home loan can cover most expenses when buying your first home, but not all of them. You’ll also need to save up for some upfront costs. Beyond the initial down payment, one key cost is stamp duty—a tax levied by the government on property purchases. 

Whether you’re buying your first property for investment or self-stay, you’ll need to pay two types of property stamp duty. Factoring these costs ensures a smooth financial journey to homeownership.

This article explains how to calculate the stamp duty payable when purchasing your first home and outlines the conditions for home stamp duty exemptions.

Understanding stamp duty 

Stamp duty is a form of tax applied to “instruments” — a term for agreements, contracts, deeds, licenses, and other written documents specified by law. Stamp duty validates these instruments as legally binding, ensuring the rights of all parties involved are protected under the law.

In Malaysia, the Stamp Act 1949 governs the collection and regulation of stamp duties. Under this act, there are two types of property stamp duties: fixed duty and ad valorem duty. 

Fixed property stamp duty in Malaysia

A fixed duty is the first type of stamp duty that applies to property ownership. This fee will apply to any instrument involved during the purchase of your property, such as:

• Memorandum of Understanding (MoU)
• Memorandum of Transfer (MoT)
• Sales & Purchase Agreement (SPA)

As the name suggests, this type of stamp duty has a fixed rate of RM10 per instrument, regardless of the amount or value specified in the transaction. This means that whether you’re purchasing a high-value property or a modest first home, the stamp duty remains RM10. 

Ad valorem property stamp duty in Malaysia

The term ‘ad valorem’ is Latin for ‘according to value.’ Unlike fixed stamp duty, ad valorem stamp duty is calculated based on the property purchase price.

The higher the property’s value, the higher the stamp duty will be, as determined by the rates outlined in the table below.

Home loan stamp duty in Malaysia

If you are financing your first property purchase with a loan, you must also pay a stamp duty fee on the loan agreement. This stamp duty is charged at a flat rate of 0.5% of the total loan amount. Here’s an example of how this stamp duty fee is calculated.

Conditions for home stamp duty exemption in Malaysia

Stamp duty exemptions are available, but it's important to remember that they can change over time, depending on updates in the national budget. As per the 2024 National Budget, there are two key conditions for home stamp duty exemptions, outlined as follows:

First-time home buyers in Malaysia

Stamp duty exemption will be applied in full for first-time home buyers who purchase a property valued at RM500,000 or below. This exemption is currently valid until the end of 2025. 

Real estate transfer between loved ones

Homeowners transferring property to loved ones will enjoy a fixed stamp duty fee of RM10 to replace the ad valorem property stamp duty.

Conclusion

While stamp duty may initially seem complex, having a clear understanding of it is essential for effective financial planning to purchase your first home. 

By familiarising yourself with the upfront stamp duty fees involved with property purchases and the exemptions you might qualify for, you can better manage your savings and make informed financial decisions when buying your first home.

You can also use our upfront costs calculator to determine the additional costs you need to consider when buying a house, such as valuation, SPA, and MoT fees.

💡 The information provided above is purely for educational purposes.