20190305 (Tue)
What is Stamp Duty on Tenancy Agreement?
Stamp Duty is a confusion for most people. Stamp Duty can be in two major aspects in property dealings:
- Memorandum of Transfer (MoT) – which includes any transfer or effects of transfer
- Document Stamping (Loan, Tenancy Agreement)
For rental properties, tenancy agreement requires adjudication – stamping. This is ad valorem duty. It depends on how much and how long this tenancy is. For example, a residential property rented at RM2,000 per month for a period of 1 year, the stamp duty calculation is as below:
- RM2,000 x 12 = RM24,000(RM24,000 – RM2,400) / 250 x 1 = RM87 (payable by tenant)
- Duplicate copy – RM10.00 (usually landlord)
If it is for less than 3 years (more than 1 year) tenancy period, the stamp duty calculation is as below:
- RM2,000 x 12 = RM24,000(RM24,000 – RM2,400) /250 x 2 = RM173 (payable by tenant)
- Duplicate copy – RM10.00 (usually landlord)
So, you can see it is a substantial amount if the period is long, and the rental amount is high. There are many who DO NOT want to do this stamping. Nonetheless, the agreement is a binding contract as in Contracts Act, 1950. It is just not adjudicated, hence cannot be presented in Court and cannot be used in loan applications as proof of income.
1st Schedule, Stamp Act 1949.
