Calculated based on Market Value or consideration paid, whichever is the higher. What does it mean? Part 1.
When taxes is calculated, the law says in Stamp Act 1949 and RPGT Act 1967, that the value used is the higher of the two – consideration paid or market value.
For example, you bought a property at good bargain when the seller was desperate to dispose off the property. Compared to the most recent transacted price of the similar property around your area, you got it RM50k cheaper. RM500,000 instead of RM550,000.
As a purchaser, you have to pay stamp duty. The calculation of stamp duty is based on RM550k and not RM500k. This is what it means by whichever is higher.
In West Malaysia, stamp duty on Memorandum of Transfer (MoT) is solely paid by purchaser. However, in Sarawak, it is paid in equal shares by both vendor and purchaser. This is market practice rather than the law.