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Understanding Tenancy Agreement Stamp Duty in Malaysia

Hey there! Today, we’re going to chat about something that might sound a bit dry, but is super important if you’re renting a place in Malaysia - the Tenancy Agreement and its Stamp Duty. So, let’s dive right in!

What is a Tenancy Agreement?

A Tenancy Agreement is like a rulebook. It’s a contract between you (the tenant) and your landlord. It covers all the important stuff like the property address, how long you’re renting for (the tenancy duration), how much you’re paying each month (the monthly rental), the deposit amount, how you’re going to pay, and any furniture that comes with the place. It also spells out the responsibilities of both you and your landlord throughout the tenancy.

Tenancy Agreement Stamp Duty and Calculation

Now, to make this Tenancy Agreement legal and admissible in court, it needs to be stamped by the Inland Revenue Board of Malaysia (LHDN). This is where the Stamp Duty comes in. The tenant usually pays for this.

The Stamp Duty for a Tenancy Agreement in Malaysia is calculated as follows:

  • For a 1-year agreement: RM1 for every RM250 of the annual rental above RM2,400. If the annual rental is below RM2,400, the stamp duty is free.

  • For an agreement between 1 to 3 years: RM2 for every RM250 of the annual rent above RM2,400.

Remember, the first RM2,400 of your annual rental income is entitled to stamp duty exemption. So, when calculating the stamp duty fee, you need to deduct RM2,400 from the annual rental amount to determine the taxable rental.

Why Tenancy Agreement Has to Be Stamped

So, why does the Tenancy Agreement need to be stamped? Well, the stamping process makes the Tenancy Agreement legal and admissible in court. This is crucial because if any disputes arise between the landlord and the tenant, the Tenancy Agreement serves as the primary reference and can be used in court.

What Happens If You Don’t Stamp Your Tenancy Agreement

If you don’t stamp your Tenancy Agreement, it’s still considered valid, but it can’t be used as evidence in court. This means that if any disputes arise between you and your landlord, you can’t use the unstamped Tenancy Agreement in court.

If you want to tender an unstamped agreement in court, you’ll need to get it stamped first. But, you’ll have to pay a penalty for late stamping on top of the original duty. The scale of the penalty is as follows:

  • RM25.00 or 5% of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped within 3 months after the time for stamping.

  • RM50.00 or 10% of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped later than 3 months but not later than 6 months after the time for stamping.

  • RM100.00 or 20% of the amount of the deficient duty, whichever sum be the greater, in any other case (if the instrument is stamped beyond six months after the required time for stamping).

So, while unstamped agreements do not affect their validity, it’s advisable to stamp your agreement to ensure that when a dispute arises, your agreements can be properly admitted as evidence in court without having to pay hefty penalties.

And that’s it! We hope this article has helped you understand more about Tenancy Agreements and Stamp Duty in Malaysia. Remember, it’s always a good idea to consult with a legal expert or real estate professional when dealing with Tenancy Agreements to ensure all legal requirements are met and rights are protected. Happy renting!

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