| PRICE TIER | STAMP DUTY on SPA & MOT (% of property price) |
| First RM100,000 | 1% |
| Next 400,000 (RM101,000 – RM500,000) | 2% |
| The following amount up to RM1 million (RM500,001 – RM 1 million) | 3% |
| Thereafter (> RM 1 million) | 4% |
The Memorandum of Transfer (MOT) is one of the first and last pieces of documents that every house buyer will sign in their ownership of a property, while stamp duty is a tax imposed on documents in the sale or transfer of a property.
In this article:
- What is Memorandum of Transfer (MOT)?
- Why do you Need Memorandum of Transfer?
- What are the Steps and Documents Involved During Transfers of Ownership?
- What Happens if the Poperty’s Title has not Been Issued?
- What is Stamp Duty? How does Stamp Duty Relate to the MOT?
- How to Calculate Memorandum of Transfer (MOT)?
- What are the Latest Stamp Duty Exemptions in Malaysia?
- Are There Any Other Closing Costs When Buying a House?
Acquiring a property is a significant life milestone. However, the process can be tedious. It may take months or years and the number of documents and procedures you have to deal with can be mind-boggling!
Most house buyers are familiar with Sale and Purchase Agreement (SPA) and loan agreement, but few understand the significance of a particular supporting document – the Memorandum of Transfer (MOT). How is this simple piece of paper important? Aren’t all the terms and conditions of your purchase already laid out in the SPA?
A memorandum is defined as a record or written statement of something. The MOT in a property capacity is the document which enables you to have your name registered on a land title, which allows you to transfer a property legally. Below are some key elements about the Memorandum of Transfer that could help you understand its role in home ownership.
What is Memorandum of Transfer (MOT)?
Memorandum of Transfer, known as MOT, is part of the documentary package that a buyer of a new property (strata or individual title) must sign to transfer the ownership of the property from the developer (or in the case of a sub-sale property, from the proprietor) to its new owner. Kindly note that the name of the official document is Memorandum of Transfer, not Memorandum of Charge, even though there are charges involved.
Often, if a bank loan is taken out to finance the purchase of the property, the MOT is prepared and signed together with the Sale and Purchase Agreement and loan documents. This way, the house buyer is spared the hassle of multiple visits to the lawyer’s office to sign the documents. An exception to this is when a property is still under construction. The house buyer will sign the MOT once the strata or individual title has been issued.
Why do you need Memorandum of Transfer?
While the signing of the MOT confirms the intention to transfer ownership, in reality, the MOT only comes into play when the name of the new owner needs to be registered on the strata or individual title by the land authorities. In other words, when the proprietor/developer/seller (transferor) gives ownership of the land or subdivided parcel to the homebuyer (transferee). The MOT is a document that lists the particulars of the seller and buyer and details the land title for the knowledge and reference of the land authorities.
This process usually happens behind the scenes. The buyer would only be aware that a transfer of ownership has occurred when they receive a letter or phone call informing them that the new title is ready for collection. In secondary market purchases, the buyer usually receives vacant possession and keys to the property along with the new title.
When purchasing from a developer, the buyer would receive the new title a few years after receiving the house, keys and vacant possession as, in most cases, the master title would not have already been subdivided. Recently, however, steps have been taken to enable buyers of primary property to receive their subdivided title along with the house and other key documents from the developer.
While the above applies to property buyers, the MOT is also used to transfer property ownership between spouses and parents to children. Property transfers between family members often do not involve exchanging money, so a sale and Purchase Agreement would not be used in those circumstances.
What are the steps and documents involved during Transfers of Ownership?
First, an MOT form, or as it is legally called, Form 14A, will be prepared bearing the names of the transferor (current owner) and transferee (new owner), their addresses, and the title details of the property.
Transfers such as monetary value or love and affection must be considered, which would be spelt out in the MOT. For an MOT to be legally effective, the document must be stamped and adjudicated at the Inland Revenue Board, and the stamp duty must be paid.
At the same time, if a bank loan had been taken to pay for the property, a Memorandum of Charge (MOC) will also be prepared to be signed by the borrower and lending bank. The MOC (Form 16A) informs the land authorities that the bank has the beneficial ownership or charge over the property. If the borrower defaults on the loan, the bank may seize and auction the property to recover the balance of the defaulted loan. The MOC must also be stamped, and the stamp duty must be paid at the value of the loan.
Once the Memorandum of Transfer and MOC have been signed and stamped and a requisite fee payment (usually RM100 each for the MOT and MOC) has been made, the documents and the current land title will be registered in the land authorities’ records. A revised title will be issued with the ownership and charge listed on the title.
NOTE: Banks keep titles charged to them until the loan is paid. Thereafter, the borrower initiates the discharge procedure to have the bank’s details removed from the title.
Download the latest Form 14/A according to states here:
Official Portal of Federal Territories Director of Lands and Mines Office
Official Portal of Kedah District and Land Office
Official Portal of Penang District and Land Office
Official Portal of Gombak District and Land Office
READ: What is a Strata Title and Why is it important for homeowners?
What happens if the property’s title has not been issued?
The MOT is only used for transfers of ownership of property where the title has already been issued. In cases where the title to the property has already been issued but the seller has not transferred the title over to his name (also known as perfected the title) and now wants to sell his property, the transfer of ownership to the buyer could happen either through a Direct Transfer or Double Transfer.
A Direct Transfer is where the developer consents to transfer the ownership of the title directly to the buyer, and only the developer and new buyer would sign the MOT. This is quite common for freehold properties with non-perfected titles.
A Double Transfer occurs when the developer doesn’t consent, and ownership must be transferred from developer to seller and seller to new buyer. This is a fairly lengthy process, as two MOTs must be signed and registered, and the title must be doubly revised. Most Double Transfers happen to leasehold properties where the seller has not perfected the title.
In cases where the developer has not applied for the subdivision of the master title into either the strata or individual title, a Deed of Assignment would be used to record the transfer of ownership of the property from the seller to the buyer or between spouses, parents, and children. Additionally, a document called the Developer’s Consent must be obtained along with the Deed of Assignment.
What is Stamp Duty? How does stamp duty relate to the MOT?
Many confuse the two, but MOT is not the same as stamp duty! All properties are subject to tax in Malaysia, and the sale and transfer of a property is no different. Stamp duty is the fee to be paid on the Sale and Purchase Agreements (SPA) of your property and for the instruments of transfer (MOT) as well as charge (loan agreements), and falls into two categories:
- Ad Valorem: Calculated based on the value of the property or loan agreements
- Nominal duties: Chargeable on a fixed duty depending on the type of legal document. Most commonly, legal agreements, copies of policies and agreements
How to calculate Memorandum of Transfer (MOT)?
Calculation of Stamp Duty on SPA & Memorandum of Transfer and Instrument on Loan Agreement
Stamp duty on the sale and transfer of a property is calculated based on the purchase price. In addition, if a loan was taken out to finance the purchase of the property, the stamp duty payable would be a flat rate of 0.5% of the total loan amount.
Under Budget 2019, the stamp duty rates on the instrument of transfer (MOT) were increased from 3% to 4% for properties costing more than RM1 million and are calculated on a tiered basis as follows:
MOT Calculator Malaysia
If you’re are looking for a MOT calculator or a Memorandum of Transfer calculator, you can use this Malaysia MOT calculator or you can try doing it manually.
Say for instance you purchased a property valued at RM600,000 and you took a loan of RM540,000.
Your total stamp duty would be:
Stamp Duty on MOT + Stamp Duty on Home Loan
= (First RM100,000 x 1%) + (Next RM400,000 x 2%) + (Remaining RM100,000 x 3%) + (RM540,000 x 0.5%)
= (RM1,000 + RM8,000 + RM3,000) + (RM2,700)
= RM12,000 + RM2,700
= RM14,700
If those computations made your head dizzy, we suggest
If those computations made your head dizzy, we suggest using the Memorandum of Transfer fee calculator from reputable law firm Low & Partners. It’s one of the best stamp-duty MOT calculators available. It’s also updated, meaning you don’t have to google MOT calculator 2021 or MOT calculator 2022.
The calculator also applies to strata-titled properties, such as condominium units, so you don’t have to Google the strata title stamp duty calculator.
What are the latest stamp duty exemptions in Malaysia?
Stamp duty exemption for first time homebuyers
During the recent tabling of Budget 2023, the government announced that it first-homebuyers who purchase residential properties worth between RM500,001 to RM 1 million will enjoy a 75% stamp duty exemption up to 31 December 2023. This stamp duty holiday was increased from the 50% exemption announced in July 2022, under the Keluarga Malaysia Home Ownership Initiative or i-MILIKI.
Besides that, it was announced in end of 2020 that a full stamp duty exemption will be given to both instruments of transfer and loan agreement for the purchase of a first home worth not more than RM500,000.
Stamp duty exemption on abandoned housing projects
A stamp duty exemption also applies to instruments executed by a rescuing contractor or property developer on or after 1 January 2013 but not later than 31 December 2025. This is described as a contractor or a developer who is appointed or approved by the Minister of Housing and Local Government to carry on rehabilitation works for an abandoned project.
The instruments are loan agreements approved by the approved financier and instruments of transfer for the purpose of transferring a revived residential property in relation to the abandoned project.
Stamp Duty Exemptions for Transfers between Loved Ones
For the transfer of property by way of love and affection between parents and children, grandparents and grandchildren – Stamp duty on the instruments of transfer of property will be fully exempted, limited to the first RM1 million of the property’s value.
The remaining balance of the property’s value is subject to the existing stamp duty tier and a 50% remission is provided on the stamp duty imposed. This exemption applies for instruments of transfers executed from 1 April 2023 and is only applicable to Malaysian citizens.
To know more, you can read this article: What you need to know about transferring property to family members
Are there any other closing costs when buying a house?
Besides stamp duties on MOTs and loan agreements, buyers would need to be aware of the following closing costs when purchasing a residential property in Malaysia:
Real Property Gains Tax (RPGT)
RPGT is tax you pay when you sell your property. The rates are between 5% to 30% depending on how long you have owned the property. RPGT is only payable if you profit from the sale. The RPGT rates in Malaysia has changed several times over the years, so always check the latest RPGT rates.
Legal fee
Starting from 15 July 2023, the legal fees will be based on the newly gazetted Solicitors’ Remuneration Order 2023. The previous rate, which was based on the Solicitors’ Remuneration Order 2005, has been repealed.
For the Sale and Purchase Agreement in your property purchase, the fee will be based on the property value and shown in the table below:
| PRICE TIER OF PROPERTY | LEGAL FEE (% of property price) |
| First RM500,000 | 1.25% (subject to a minimum of RM500) |
| Next RM7,000,000 (RM500,001 – RM7,500,000) | 1% |
| Thereafter (> RM7,500,000) | Subject to negotiation but shall not exceed 1% |
A separate fee is charged for the preparation, filing, and application to the State Authority or Statutory Body for consent to transfer or charge:
| PRICE TIER | LEGAL FEE (per application) |
| Properties below RM100,000 | RM200 |
| Properties above RM100,000 but below RM1,000,000 | RM500 |
| Properties above RM1,000,000 | RM3,000 (RM500 if application is only consent to charge) |
Legal fees are also charged for preparing and filing RPGT forms (also known as CKHT forms). The fees are as the following:
| FORM | LEGAL FEE |
| Form CKHT 1A | RM500 (additional RM300 for each extra form) |
| Form CKHT 2A | RM400 (additional RM300 for each extra form) |
| Form CKHT 3 | RM200 (additional RM200 for each extra from) |
| Form CKHT 502 | RM250 (for each vendor) |
Other costs that come under legal fees are remuneration costs which include the following:
- Travelling or accommodation expenses
- Fee paid on searches
- Costs of extracts from any register or record
- Miscellaneous expenses not exceeding RM100
Valuation fee
This is applicable if you take a bank loan to finance the purchase of a property. All banks would require a valuation by an independent land surveyor on a property before they approve a loan. This land surveyor fee is charged by the bank and included in the bank’s Letter of Offer, so do check your Letter of Offer properly before signing it to avoid any unwanted surprises.
The surveyor fee is calculated based on a percentage of the property value:
For the first RM100,000 = 0.25%
Next residue up to RM2 million = 0.2%
Property Agent fee
Buyers of secondary properties usually engage a property agent or broker and the fee payable to the agency is usually 2% to 3% of the property value. Oftentimes, this would come out of the initial 10% earnest deposit paid at the beginning of a property purchase. Having said that, some agencies might charge less than that amount or as a fee that is separate from the earnest deposit payment.
Mortgage insurance – MRTA/MLTA
Most banks nowadays would require buyers to purchase some form of insurance on the property in a housing loan to protect the value of the property. The most common would be Mortgage Reducing Term Assurance (MRTA). The cost of MRTA is largely dependent on the age of the borrower and the total mortgage on the property (roughly 3% to 5% of the total mortgage). Another insurance offered by banks is Mortgage Level Term Assurance (MLTA) which provides for the repayment of your outstanding home loan as well as a guaranteed cash value back at the end of the scheme. Both MRTA and MLTA have their own benefits.
And there you have it – a simple but crucial document that stands between you and having your name registered on a land title.
Article edited by G.Zizan
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