Stamp Duty Calculation in Malaysia: MOT, Loan Agreement and Examples

Stamp duty calculation in Malaysia usually involves separate duties on the property transfer and the loan agreement. This guide explains the practical calculation flow so buyers can estimate upfront cash needs before signing.

Introduction

Stamp duty is one of the largest upfront costs in a Malaysian property transaction — yet buyers frequently underestimate it. There are two separate stamp duty obligations: one on the transfer document (MOT) and one on the loan agreement. Both must be settled before registration can proceed.

This guide is focused on stamp duty calculation in Malaysia: how to work through the MOT bands, how loan agreement duty is counted, what exemptions affect the numbers, and how the final payable amount looks in a real transaction example.

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What Is Stamp Duty?

Stamp duty is a tax imposed under the Stamp Act 1949 on instruments (documents) that effect the transfer of property or create a legal obligation such as a loan. The Inland Revenue Board (LHDN) collects stamp duty.

In a property transaction, stamp duty is payable on two instruments:

1. Memorandum of Transfer (MOT) — the document that transfers ownership from seller to buyer
2. Loan Agreement / Deed of Assignment — the document creating the bank's charge over the property

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Part 1: Stamp Duty on the MOT (Transfer of Ownership)

The MOT stamp duty is calculated on the higher of the purchase price or the market value assessed by LHDN.

Current Rates (as at 2025)

| Purchase Price / Market Value | Rate | |---|---| | First RM 100,000 | 1% | | RM 100,001 – RM 500,000 | 2% | | RM 500,001 – RM 1,000,000 | 3% | | Above RM 1,000,000 | 4% |

MOT Exemptions

First-time homebuyer exemption (residential properties only):

• For properties priced RM 500,000 and below: Full exemption on MOT stamp duty for first-time buyers (extended under Budget 2023, confirmed through 2025).
• For properties priced RM 500,001 – RM 1,000,000: 75% exemption on MOT stamp duty for first-time buyers.

Affordable housing schemes: Properties under government affordable housing programmes (PR1MA, PPR, RUMAWIP, etc.) may carry additional exemptions — confirm with the developer or LHDN.

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Part 2: Stamp Duty on the Loan Agreement

The loan agreement stamp duty is a flat 0.5% on the total loan amount.

This applies to all property loans — residential, commercial, or industrial — and to all buyers, including first-time buyers (the first-time buyer exemption does not cover the loan agreement).

Example: A buyer takes a RM 700,000 loan → stamp duty on loan agreement = RM 700,000 × 0.5% = RM 3,500

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Real Transaction Example

Property: Residential apartment, Shah Alam, Selangor Purchase price: RM 650,000 Loan amount: RM 520,000 (80% margin of finance) Buyer profile: First-time homebuyer, Malaysian citizen

MOT Stamp Duty Calculation

| Price Bracket | Amount in Bracket | Rate | Stamp Duty | |---|---|---|---| | First RM 100,000 | RM 100,000 | 1% | RM 1,000 | | RM 100,001 – RM 500,000 | RM 400,000 | 2% | RM 8,000 | | RM 500,001 – RM 650,000 | RM 150,000 | 3% | RM 4,500 | | Total MOT Stamp Duty (before exemption) | | | RM 13,500 |

First-time buyer exemption (RM 500,001 – RM 1,000,000: 75% exemption): RM 13,500 × 25% = RM 3,375 (amount payable after exemption)

Loan Agreement Stamp Duty

RM 520,000 × 0.5% = RM 2,600

Summary of Stamp Duty Costs

| Item | Amount | |---|---| | MOT Stamp Duty (after first-time buyer exemption) | RM 3,375 | | Loan Agreement Stamp Duty | RM 2,600 | | Total Stamp Duty | RM 5,975 |

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Other Transaction Costs to Factor In

Stamp duty is not the only upfront cost. Buyers should budget for:

| Cost | Typical Amount | |---|---| | Legal fees (SPA) | RM 3,000–8,000 (tiered scale) | | Legal fees (loan documentation) | RM 2,000–5,000 | | Valuation fee | RM 500–2,000 | | Property assessment / cukai tanah (pro-rated) | Varies | | Agent co-broking fee (if applicable) | 2–3% of purchase price |

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Common Mistakes

Calculating stamp duty on loan amount only: Some buyers only budget for loan agreement stamp duty and forget the MOT — which can be the larger of the two obligations at higher price points.

Assuming first-time buyer exemption applies to commercial property: The first-time buyer exemption applies to residential properties only. Commercial, industrial, and land transactions are assessed at full rates.

Not accounting for LHDN market value assessment: If LHDN assesses the property at a market value higher than the purchase price, stamp duty will be calculated on the higher assessed value. This is common in transactions where the price is below prevailing market levels.

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How to Pay

Stamp duty on the MOT and loan agreement is typically handled by the buyer's solicitor, who:

1. Lodges the instruments online via MyStamp (LHDN's stamp duty portal)
2. Receives an LHDN assessment
3. Collects payment from the buyer and remits to LHDN
4. Receives the stamped documents, which are then registered at the land registry

Timeline from lodgement to payment: typically 1–3 weeks.

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For Agents

Knowing how to give your buyer a rough upfront cost estimate — including stamp duty — is a basic professional expectation. A buyer who is surprised by a RM 15,000 stamp duty bill at the signing stage is unlikely to refer you to friends.

For every residential buyer over RM 500,000, walk them through this calculation at the offer stage. It demonstrates expertise and prevents late-stage transaction breakdowns.

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Published on PropPlace.my — Malaysia's co-broking property marketplace for industrial, commercial, and land transactions.

Related stamp duty guides

Use this calculation walkthrough with the broader stamp duty Malaysia guide and the property costs and taxes pillar.