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2022 Stamp duty, legal fees, and five other expenses to consider when buying a home in Malaysia

Contrary to popular belief, the cost of purchasing a home is not limited to the 10% down payment. Find out about the 7 other costs homebuyers should be aware of, such as the most recent stamp duty fees, legal fees for the Sale and Purchase Agreement (SPA) and loan agreement, and property valuation fees.

The experience of looking for a dream home is one that a first-time home buyer will never forget. However, you may overlook certain critical elements when calculating the total cost of purchasing your home because many buyers are likely to focus solely on the largest outlay - the property's 10% down payment or deposit. Developer promotions, discounts, and rebates may entice you even more.

However, there are other significant costs in the home-buying process that you should consider, particularly near the end of the transaction. These are variable third-party fees, also known as closing costs. Ignore them, and you risk financial setbacks and disappointment in your quest to own a home.

The following are some significant closing costs that you should factor into your property budget planning:

1. Stamp duty fees

Stamp duty is an unavoidable cost in real estate purchases. It is the tax levied on property documents during the sale or transfer of the property, as specified in the First Schedule of the Stamp Duty Act 1949. The sale or transfer of properties in Malaysia that are subject to stamp duty must be stamped within 30 days of the execution date. The tax consists of:

  • Stamp duty on your property's Sale and Purchase Agreements (SPA) is only RM10.

  • Stamp duty on transfer documents - Memorandum of Transfer (MOT) or Deed of Assignment The stamp duty is calculated using a tiered system, as illustrated in the table below.

  • Stamp duty on your loan agreement is 0.5% of the total loan amount.

The Malaysian government announced a stamp duty hike for properties costing more than RM1 million during Budget 2019, increasing the rate from 3% to 4%, which went into effect on July 1, 2019.

Latest stamp duty fees on the MOT or DOA

Price tier

Stamp duty Malaysia (% of property price)

First RM100,000


Next 400,000 (RM101,000 – RM500,000)


The following amount up to RM1 million(RM500,001 – RM 1 million)


Thereafter (> RM 1 million)


In Malaysia, how is stamp duty calculated?

For example, if you buy a RM750,000 property, you will have to pay a total of:

{(First RM100,000 X 1%) + (Next RM400,000 X 2%) + (Remaining RM250,000 X 3%) } + 0.5% of loan amount (90% of RM750,000) + RM10 for stamp duty on SPA
= {RM1,000 + RM8,000 + RM7,500} + 0.5% X (RM675,000) + RM10
= RM16,500 + RM3,375 + RM10

Payment of stamp duty for MOT

For secondary or subsale properties, a new property owner (strata or individual ownership) must sign the Memorandum of Transfer (MOT) to transfer ownership from the developer or previous owner. To be valid, a MOT must be stamped and adjudicated at the Inland Revenue Board, and stamp duty must be paid accordingly. This stamp duty is typically paid by a law firm hired by the homebuyer.

Stamp duty can now be paid online on the LHDN's official website using the Stamp Assessment And Payment System, or STAMPS.

Stamp Duty Exemptions in 2022

1) Stamp duty exemption under Budget 2021

The government did not directly announce a stamp duty exemption during the postponement of Budget 2022.

However, it was stated in Budget 2021 that stamp duty exemption will be granted to both instruments of transfer and loan agreements for the purchase of a first home worth no more than RM500,000 - the home can be either new-launch or subsale:

The following criteria must be met in order to qualify for this exemption:

  • This exemption will apply to SPAs completed between January 1, 2021 and December 31, 2025.

  • It only applies to residential properties, not SOHO/SOFO/SOVO or serviced residences built for commercial use.

  • Malaysian citizens must be first-time homebuyers.

  • The buyer must not already own a residential property; if he or she inherited or was given one (whether individual or joint ownership), he or she is no longer eligible.

  • The exemption is granted in two stages of transfer: from the property developer to a qualifying financial institution/bank, and then from the bank to the Malaysian citizen.

On a RM500,000 home, a full stamp duty exemption will save you RM11,250!

2) Stamp duty exemption under i-MILIKI

Under the Keluarga Malaysia Home Ownership Initiative, the Malaysian government announced on July 15, 2022, that first-time homebuyers will receive a stamp duty exemption on the instrument of transfer and loan agreement.

i-MILIKI is a stamp duty exemption incentive for instruments of transfer and loan agreements used to purchase first homes in Malaysia.

First-time homebuyers who purchase a home worth RM500,000 or less will receive a 100% exemption, while properties worth RM500,000 to RM1 million will receive a 50% exemption.

The exemption will apply to sales and purchase agreements completed between June 1, 2022 and December 31, 2023.

3) Stamp duty exemption on abandoned housing projects

A stamp duty exemption also applies to instruments executed on or after January 1, 2013, but no later than December 31, 2025, by a rescuing contractor or property developer. A contractor or developer who is appointed or approved by the Minister of Housing and Local Government to carry out rehabilitation work on an abandoned project is referred to as a rehabilitation contractor.

The instruments are loan agreements approved by the approved financier and transfer instruments used to transfer a revived residential property in relation to the abandoned project.

Ended: HOC 2021 or Home Ownership Campaign

The previous HOC, which provided full stamp duty exemptions on new launch property purchased by Malaysian homebuyers, will expire on December 31, 2021. Despite numerous requests to the government to extend it until 2022, no announcement or indication that it will be revived has been made.

2. Legal fees

Unless you have a legal background and some of the necessary expertise and knowledge, you will almost certainly need legal assistance with your real estate purchase. Your designated solicitor will prepare all necessary documents and contracts to facilitate the property transfer.

Legal fees for preparing the Sale and Purchase Agreement range from 0.25% to 1% of the purchase price, depending on the value of the homes.

In Malaysia, how are legal fees calculated?

The following are the legal fee rates in Malaysia:

Price Tier

Legal Fee (% of property price)

First RM500,000


Next 500,000 (RM500,001 – RM 1 million)


Following RM2,000,000 (RM1,000,001 – RM 3 million)


Next RM2,000,000 (RM3,000,001 – RM 5 million)


Thereafter (> RM 5 million)


For example, if you are purchasing a RM750,000 residential property, you will have to pay a total of:

(First RM500,000 X 1%) + (Next RM250,000 X 0.8%) 
= RM5,000 + RM2,000 
= RM7,000 

Although some developers may pay the legal fees, as a buyer, you will always be responsible for paying the stamp duty. Learn what a lawyer can do for you when purchasing a home in Malaysia.

3. Real Property Gains Tax (RPGT)

Aside from owning your own residential property, a first-time homebuyer should consider the possibility of eventually selling the property.

This could be for a variety of reasons, such as wanting to upgrade, relocate for a new job, find a better-suited home, or simply sell to profit from capital growth when the market is booming. Regardless, selling your home to a new buyer will necessitate the payment of real estate gains tax. RPGT is a type of Capital Gains Tax levied by the Malaysian Inland Revenue (LHDN) on profits made from the sale of your land or real property.

Knowing RPGT can help you sell your property at the right time and save you a lot of money!

RPGT exemption in 2022

Finance Minister Tengku Zafrul announced in the recent Budget 2022 that the government will no longer impose Real Property Gains Tax (RPGT) on residential property disposals by Malaysian citizens and permanent residents beginning in the sixth year. This means that the RPGT rate for property disposals in the sixth and subsequent years of ownership will be reduced to 0% beginning January 1, 2022. Previously, Malaysians who sold their home in the sixth (and subsequent) years of ownership were subject to a 5% RPGT.

RPGT rates effective from January 1, 2022

RPGT Rates

Individuals (Citizens & PRs)

Individuals (Non- Citizens & Foreigners)


Disposal in 1st year




Disposal in 2nd year




Disposal in 3rd year




Disposal in 4th year




Disposal in 5th year




Disposal in 6th year & beyond

0% (Reduced from 5%)



Those who sell their home in less than three years will still be charged 30% RPGT; 20% in year four and 15% in year five.

Remember that there are additional RPGT exemptions for the following conditions:

  • For Malaysian citizens and permanent residents (whichever is greater), an exemption of 10% of profits or RM10,000 per transaction is available for the following two scenarios:

  1. If a Malaysian citizen transfers an asset as a gift to the acquirers, who are either husband and wife, parent and children, or grandparents and grandchildren. This exemption does not apply to transfers made between siblings.

  2. Exemption from chargeable gain on the disposal of one private residence by a Malaysian citizen or Permanent Resident once in a lifetime

  • When selling their property, homeowners who own low or medium-cost housing priced below RM200,000 are exempt from RPGT.

4. Property agent fees

If you use property or real estate agents, especially when purchasing a home in the secondary market, their fees will be added to the price you pay for your home. Although most buyers are aware of this, there are still some who do not include agent fees in the total cost. This could be a setback, especially if your budget is limited.

The maximum fee for services provided by agents on the sale of any land or building is normally 3%, though many brokers and agents charge less on a case-by-case basis.

As a buyer, you should negotiate and confirm your estate agent fees before officially engaging them to represent you in any property transactions. This will assist you in calculating your total cost ahead of time.

5. Property valuation fees

Unless you are paying cash for the property, you will most likely be looking for a housing loan from a bank to fund the purchase. Before approving the loan amount, financial institutions will usually require a valuation of the property, and most banks will charge a fee for these valuations.

How are valuation fees calculated?

The valuation fee for real estate, like legal fees, is usually borne by the buyer and is calculated as a percentage of the purchase price.

For first RM100,000.00 =0.25%

Next residue up to RM2 million = 0.2%

Next residue up to RM7 million = 0.167%

Next residue up to RM15 million = 0.125%

Next residue up to RM50 million = 0.10%

Factors that influence the value of your home

Understanding the factors that contribute to a property's value (or lack thereof) will aid in purchasing/investment decisions. Typically, the following factors influence the value of a residential property:


The value of a property rises as it gets closer to the city centre. On the other hand, if the home is near something unfavourable, such as a cemetery, power plants, or a waste disposal area, the property's value may suffer.

Accessibility and amenities

A property's value is generally increased if it is close to major highways, public transportation nodes such as the MRT and LRT, and conveniences such as clinics and private hospitals, educational institutions, banks and shopping malls, as well as international or private schools.

Maintenance and renovations

This is true for subsale properties: valuers will consider maintenance and renovation work done to improve the livability and aesthetic value of the property.

Quality of construction

A building made of high-quality materials may last longer before breaking down, and thus will be more valuable. Homes built more than a decade ago can still command a premium price due to the high quality of the building materials, workmanship, and structural design.

6. Home insurance

Most banks will require home buyers to purchase insurance as part of the housing loan package to protect the property's value. The most common options are:

Mortgage Reducing Term Assurance (MRTA)

MRTA is the most popular and cost-effective option for home loan borrowers, and it is typically packaged as an option when applying for a home loan at a bank. It is a group term life insurance policy with a single premium that pays off your outstanding home loan in the event of your death or total permanent disability.

The cost of MRTA is determined by the borrower's age (usually, the older the borrower, the higher the MRTA) and the total mortgage on the property (typically, 3% to 5% of the total mortgage).

Mortgage Level Term Assurance (MLTA)

MLTA provides repayment of your outstanding home loan as well as a cash value guarantee at the end of the scheme. This monetary benefit will assist your family in the event of your death or total and permanent disability (TPD). In contrast to the MRTA, anyone can be a beneficiary for an MLTA; the policyholder can name any family member as a beneficiary to receive the pay-out if something happens to him or her.

The sum assured on an MLTA remains constant or level throughout the policy's tenure period. The most important aspect of this mortgage insurance is that the proceeds are not subject to credit checks and will not be frozen.

Term Life Insurance

This is the oldest and most common type of life insurance, providing your family (beneficiary) with a lump sum payment (sum assured) in the event of your death or TDP during the policy's term.

The premium structure, on the other hand, is similar to the MRTA but more flexible in that you and your loved ones will be protected as long as you pay the premium and it can be terminated at any time. In exchange for a slightly higher premium, policyholders can also extend the coverage by including critical illness in the condition.

7. Home renovations

For example, after you have completed the purchase of the house, you may wish to change the wall colors, doors, floorings, windows, fences, roofing, rooms, and other elements to suit your tastes. Depending on whether the renovations are major or minor, these could easily add up to your total costs.

Here's a pro tip: Most experts advise not spending more than 10% of the value of your home on renovations. Check out our simple guide on how much a home renovation in Malaysia costs.

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