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Stamp duty exemptions on the purchase of first residential homes
To further encourage Malaysians to purchase their first home, in Budget 2021 the Government proposed to waive the stamp duty on the instruments of transfer and loan agreements for the purchase of first residential homes valued up to RM500,000 (previously RM300,000). The exemptions are applicable for sale and purchase agreements (SPAs) executed between 1 January 2021 and 31 December 2025 (see Take 5: Malaysia Budget 2021).
To legislate this proposal, the following Exemption Orders were gazetted on 10 February 2021 and are deemed to have come into operation on 1 January 2021:
- Stamp Duty (Exemption) Order 2021 [P.U.(A) 53]
- Stamp Duty (Exemption) (No. 2) Order 2021 [P.U.(A) 54]
The Exemption Orders will apply to only one unit of residential property, on condition that:
(a) The SPA is executed between 1 January 2021 and 31 December 2025; and
(b) The individual has never owned any residential property, including a residential property obtained by way of inheritance or gift, which is held either individually or jointly.
The application for the exemptions will have to be accompanied by a statutory declaration (under the Statutory Declarations Act 1960) by the individual confirming point (b) above.
The definitions below are also outlined in the Orders:
a. Residential property
A house, a condominium unit, an apartment or a flat purchased or obtained solely to be used as a dwelling house
b. Individual
Purchaser or co-purchaser of a residential property who is a Malaysian citizen
Stamp Duty (Exemption) Order 2021
The Order provides that all instruments of transfer executed in relation to the purchase of a residential property valued up to RM500,000 (based on market value) by an individual, will be exempted from stamp duty.
Income Tax (Exemption) (No. 2) Order 2021 [P.U.(A) 54]
The Order provides that any loan agreement to finance the purchase of a residential property valued up to RM500,000, will be exempted from stamp duty.
This Order applies to loan agreements executed between the individual (as named in the SPA) and the following:
(a) A licensed bank under the Financial Services Act 2013 (FSA)
(b) A licensed Islamic bank under the Islamic FSA
(c) A development financial institution prescribed under the Development Financial Institutions Act 2002
(d) A licensed insurer under the FSA
(e) A licensed takaful operator under the Islamic FSA
(f) A co-operative society registered under the Co-operative Societies Act 1993
(g) Any employer who provides an employee housing loan scheme
(h) The Borneo Housing Mortgage Finance Berhad incorporated under the Companies Act 2016 (CA) or
(i) The Mutiara Mortgage and Credit Sdn Bhd incorporated under the CA