- 20190308 (Fri)
Why is property Market Value used in determining Stamp Duty?
Obviously, this is to safeguard tax collection for the government. Imagine if consideration paid is much lower, the amount of duty would be far less. JPPH Valuers have got a job to do!
To further analyze, consideration paid is very much a negotiated amount. If a person has RM50,000 cash and paid for a house RM300,000 with this cash – the cash payment might not be recorded. Therefore, the stamp duty paid for this dealing is on RM250,000 and not the actual transaction. The government thus lost RM50,000 x 2% = RM1,000 in tax collection.
Therefore, the stamp duty collection is to be based on market value or consideration paid, whichever is HIGHER. Take for example, if the market value of this property is RM330,000, and owner sold it above at RM340,000 but with cash payment of RM50,000 not recorded. Despite the transacted SPA price being RM290,000 (340,000 less 50,000), market value of RM330,000 is used for stamp duty calculation.
- RM330,000 Market Value – Stamp duty = RM1,000 + RM4,600 = RM5,600
- RM290,000 Consideration Paid – Stamp duty = RM1,000 + RM3,800 = RM4,800.
The correct amount of stamp duty payable is RM5,600 (higher).