Exemption from stamp duty for first homes is a positive initiative as it can provide financial assistance to first home buyers, especially for those who are young and just starting their careers. The cost they have to bear to buy a house may be a huge burden, and with the exemption of stamp duty, they can reduce the financial burden they have to bear.
Table of Contents
1. What is Stamp Duty 2023
According to a reference from the Inland Revenue Board (IRB), stamp duty is a tax that will be levied on written documents (deeds) and not transactions. In general, stamp duty is charged on legal, commercial and financial instruments listed under the First Schedule of the Stamp Act 1949.
Stamp duty is important because every document (letter) must be stamped perfectly so that it becomes a valid document and evidence in court.
2. What is the Transfer of Ownership Stamp Duty Rate 2023
In the 2019 budget, the government has announced an increase in house stamp duty for properties worth more than RM1 million, for which the rate has increased by 3% to 4%.
Therefore, the latest 2023 house stamp duty rate is calculated as below.
| House Price | Transfer of Ownership Stamp Duty (% from House Price) |
| First RM100,000 | 1% |
| The next RM400,000 (RM101,000 – RM500,000) | 2% |
| The next amount up to (RM500,0001- RM1 million) | 3% |
| Next amount (>RM1 million) | 4% |
3. Example of 2023 Transfer of Ownership Stamp Duty Calculation
Example 1 :
If you buy at a price of RM500,000, the transfer stamp duty calculation is as follows.
| House Price | RM500,000 |
| First RM100,000 | RM100,000 x 1% = RM1000 |
| The next RM400,000 (RM101,000 – RM500,000) | RM400,000 x 2% = RM8000 |
| TOTAL HOUSE STAMP DUTY | RM9,000 |
Example 2:
Assuming you buy at a price of RM800,000, the transfer stamp duty calculation is as follows.
| House Price | RM800,000 |
| First RM100,000 | RM100,000 x 1% = RM1000 |
| The next RM400,000 (RM101,000 – RM500,000) | RM400,000 x 2% = RM8000 |
| The next amount, RM300,0000 | RM300,000 x 3% = RM9000 |
| TOTAL HOUSE STAMP DUTY | RM18,000 |
Example 3:
If you buy at a price of RM1,200,000, the transfer stamp duty calculation is as follows.
| House Price | RM1,200,000 |
| First RM100,000 | RM100,000 x 1% = RM1000 |
| The next RM400,000 (RM101,000 – RM500,000) | RM400,000 x 2% = RM8000 |
| The next amount up to (RM500,0001- RM1 million) | RM500,000 x 3% = RM15,000 |
| The next amount is RM200,000 | RM200,000 x 4% = RM8,000 |
| TOTAL HOUSE STAMP DUTY | RM32,000 |
4. 2021 First Home Stamp Duty Exemption
Did you know that the cost of stamp duty can cost quite a lot of money especially if it involves the purchase of a residential property.
However, in order to continue to encourage home ownership, the government will implement a full stamp duty exemption given on transfer documents and loan agreements for the purchase of a first residential home worth up to RM500,000.
Exemption from stamp duty is only given if the Sale and Purchase Agreement is enforced from 1st January 2021 until 31st December 2025.
This means, if you buy a house below RM500,000 in the year 1st January 2021 until 31st December 2025, and you are a first-time home buyer then you will enjoy the 2023 house stamp duty exemption.
5. 2023 First Home Stamp Duty Exemption Criteria
Before you can enjoy the 2023 house stamp duty exemption, you must make an undertaking confirming the house purchased is as follows.
- Effective date of the Sale and Purchase Agreement: 1 January 2021 to 31 December 2025.
- Confirm that the purchase price of the said residential property does not exceed RM500,000.
- Confirming the residential property purchased does not include small office home office (SOHO), small office flexible office (SOFO), small office virtual office (SOVO) and service apartment.
- You have never owned any residential property including residential property acquired through inheritance or gift, held either individually or jointly and have never had a stamp duty remission application approved.
This stamp duty exemption is a positive step taken by the government to encourage the purchase of a first home and help people who want to own their own home. It is hoped that this move can help increase home ownership among Malaysians and provide long-term benefits to the national economy.