Legal Issues

As I am fresh in property field, it would be advantageous if I post something that benefit myself and readers who intend to buy first property and have no idea about legal facts in buying property. It would also do good to foreigners who intend to work in Malaysia and find property to settle down.

Issues like legal fees that need to pay to lawyer, stamp duty and real properties gain tax.

Legal Fees Payable in Buying a Property

The legal fees payable to a lawyer acting for you when you buy a property is calculated based on the purchase price as follows:

-For the first RM150,000, the legal fees payable is 1%

-For the next RM850,000, the legal fees payable is 0.7%

-For the next RM2,000,000, the legal fees payable is 0.6%

-For the next RM2,000,000, the legal fees payable is 0.5%

-For the next RM2,500,000, the legal fees payable is 0.4%

-For the remaining, if any, negotiable

For instance, if the purchase price is RM400,000. The calculation is as follows:

Total legal fees payable:

(RM150,000 X 1%) + (RM250,000 X 0.7%) = RM 3,250.00

No discount rule

According to solicitors’ Remuneration Order, lawyers are strictly not allowed to give discount in conveyancing matters.

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STAMP DUTY PAYABLE

A purchaser of a property has to pay stamp duty to the Malaysian Government when he buys a property.

To calculate stamp duty fees, the stamp duty chargeable on the sale and purchase Agreement is RM10 each. The stamp duty chargeable on the Memorandum of Transfer is calculated based on the purchase price as follows:

-For the first RM100,000, the stamp duty payable is 1%

-For the next RM400,000, the stamp duty payable is 2%

-For any sum exceeding RM500,000, the stamp duty payable is 3%.

For instance, if your purchase price is RM800,000. The calculation is as follows:

Total stamp duty payable:

(RM100,000 X 1%) + (RM 400,000 + 2%) + (300,000 X 3%) = RM18,000.

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Stamp Duty Payable when Renting a Property

(Wow! I do not know renting a property is chargeable for stamp duty)

Stamp Duty Computation (for a 2 years tenancy)

monthly rent x 12 - 2400
----------------------------------- x 2 years

250

For example, if the monthly rental is RM8,000, Stamp duty payable is as follows:

RM8,000 X 12-2,400

----------------------------------- x 2 years = RM748.80

250

However, it would be the best to appoint a lawyer and have him/her to advise you in the law issues. Legal issues could be complicated.

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Real Properties Gains Tax

With effect from 1st April 2007, all persons are exempted from the provisions of the Real Properties Gains Tax Act 1967.

However under proposed budget 2010, the RPGT of 5% would be imposed from Jan 1 on gains (minus 10% or MYR 10,000 whichever is higher from the gain) from the disposal of real property irrespective of the holding period and category of owner.

(Adapted from http://www.propertylink.com.my/investmentguide.php)