Stamp Duty Increase in 2025: Key Points You Need to Know

In 2025, Malaysia's stamp duty policy will undergo adjustments, which could significantly impact homebuyers, investors, and related industries. Whether you're planning to purchase property, refinance, or invest in the real estate market, understanding the details of this change will help you plan for the future.

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This article will guide you through the key points of the upcoming stamp duty increase and its potential effects.

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What is Stamp Duty?

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Stamp duty is a tax levied on legal documents to make them admissible in court. It applies to documents such as:

• Sale and purchase agreements
• Loan agreements
• Tenancy contracts

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Without proper stamping, these documents may be deemed invalid in disputes.

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Stamp Duty on Tenancy Agreements

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Starting from January 1, 2025, stamp duty on rental properties will be calculated based on the monthly rent and the duration of the lease. The stamp duty rates for tenancy agreements have increased in 2025, with the new rates as follows:

Stamp duty is calculated based on every RM250.00 or part thereof, depending on the average rent and other considerations for the entire year.

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Formula Calculation:

1. Monthly rent x 12 = Annual rent

2.Annual rent ÷ RM250 = Number of rental units

3.Number of rental units x stamp duty fee for the corresponding lease term = Total stamp duty (original)

4.Total stamp duty (original) + RM10 (Total stamp duty (copy)) = Total cost

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Example Calculation:

Let’s say you’re renting a property for RM2,000 per month for 3 years.

1. RM2,000 x 12 = RM24,000

2.RM24,000 ÷ RM 250 = 96

3. 96 x RM3 = RM288 (RM3 for 3-year tenancy)

4. RM288 + RM10 = RM298

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 Important Note:

The tenant is responsible for paying the stamp duty on the tenancy agreement, not the landlord.

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Deadlines and Penalties for Late Stamping

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It's important to settle the stamp duty within the required period to prevent penalties.

• Instruments executed within Malaysia: Must be stamped within 30 days from the date of execution.
• Instruments executed outside Malaysia: Must be stamped within 30 days from the date it is first received in Malaysia.

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Penalties for Late Stamping (Effective from January 1, 2025)：

Consequences of Failing to Stamp or Insufficiently Stamped Instruments:

• Not Admissible in Court: The document will be deemed inadmissible as evidence in legal proceedings.
• Inaction by Public Officers: Public officers will not take action on an unstamped or insufficiently stamped instrument.

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Why Should You Care About Stamp Duty?

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Stamp duty significantly impacts the cost of property transactions. Here’s why it’s important:

• Budgeting: Knowing the rates helps you plan your finances.
• Compliance: Avoid fines and legal complications by adhering to stamping requirements.
• Strategic planning: Investors can factor in stamp duty when calculating returns.

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Frequently Asked Questions (FAQs) about Stamp Duty in Malaysia

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Q:How is the stamp duty on tenancy agreements calculated?

A:Stamp duty is typically calculated based on the rental amount and the duration of the lease. The rate is 0.25% of the total rent payable over the lease term.

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Q:What happens if stamp duty is not paid?

A:If the stamp duty is not paid, the tenancy agreement will not be legally valid and cannot be used as evidence in court. It may also prevent the tenant from enforcing rights under the agreement.

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Q:Can stamp duty on a tenancy agreement be paid after the lease starts?

A:No, the stamp duty must be paid within 30 days of the agreement being signed, whether it is signed in Malaysia or abroad.

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