Tenancy Agreement Stamp Duty Calculation Malaysia

Tenancy Agreement Stamp Duty Calculation in Malaysia – A Comprehensive Guide

If you`re planning to rent a property in Malaysia, it`s important to understand the legal requirements and implications of signing a tenancy agreement. One of the most crucial aspects to consider is the stamp duty, which is a tax levied on any legal document by the government.

In this article, we`ll provide you with a comprehensive guide to understanding tenancy agreement stamp duty calculation in Malaysia.

What is Stamp Duty?

Stamp duty is a form of tax levied on legal documents that formalize an agreement between two or more parties. In the context of tenancy agreements, stamp duty is payable by the renter to the government for the documentation of the rental agreement.

The amount of stamp duty payable on a tenancy agreement in Malaysia is governed by the Stamp Act 1949 and its subsequent amendments.

Tenancy Agreement Stamp Duty Calculation

The stamp duty payable on a tenancy agreement is calculated based on the monthly rental amount and the duration of the rental period. The formula for calculating stamp duty on a tenancy agreement in Malaysia is as follows:

Stamp Duty Payable = RM1 for every RM250 of rental for the first RM2,400 + RM2 for every RM250 of rental for the subsequent months

Let`s take an example to understand this better. Suppose you`re renting a property for 12 months at a monthly rental of RM2,500. Here`s how you can calculate the stamp duty payable:

Step 1: Calculate the annual rental by multiplying the monthly rental with the rental period.

Annual rental = RM2,500 x 12 = RM30,000

Step 2: Calculate the stamp duty payable for the first RM2,400 of rental.

Stamp duty for first RM2,400 = RM1 for every RM250 of rental x (RM2,400 ÷ RM250) = RM24

Step 3: Calculate the stamp duty payable for the subsequent months.

Stamp duty for subsequent months = RM2 for every RM250 of rental x [(RM30,000 – RM2,400) ÷ RM250] = RM263.20

Step 4: Add the stamp duty payable for the first RM2,400 and subsequent months.

Total stamp duty payable = RM24 + RM263.20 = RM287.20

This means that you would have to pay RM287.20 as stamp duty for this tenancy agreement.

Who Pays for the Stamp Duty?

As per the law, the tenant is responsible for paying the stamp duty for a tenancy agreement in Malaysia. However, it`s important to note that the landlord may negotiate with the tenant for sharing or fully bearing the stamp duty cost.

How to Pay for Stamp Duty?

You can pay for the stamp duty on a tenancy agreement at any LHDN (Inland Revenue Board Malaysia) branch or online via the e-stamping portal. You`ll need to fill in the necessary details and provide supporting documents, such as the tenancy agreement and proof of payment.

In conclusion, as a tenant, it`s important to factor in the stamp duty cost when budgeting for a rental property in Malaysia. Knowing how to calculate and pay for the stamp duty can help you avoid any legal issues and ensure a smooth rental experience.