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Memorandum of Transfer (MOT) and Stamp Duty in Malaysia


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.

© Theerapan Bhumirat | 123rf

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)?

MOT meaning: Memorandum of Transfer, or known as MOT, is part of the documentary package that a buyer of a new property (strata or individual title) must sign in order to transfer the ownership of the property from the developer (or in the case of a subsale 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.

Oftentimes, 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 would be 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) is giving ownership of the land or subdivided parcel to the homebuyer (transferee). The MOT is basically a document that lists down the particulars of the seller and buyer and land title details for the knowledge and reference of the land authorities.

This process usually happens behind-the-scenes. The buyer would only be aware that 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 would usually receive 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 buyers of property, the MOT is also used to transfer ownership of property between spouses and from parents to children. More often than not, transfers of property between family members do not involve an exchange of money. As such, 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) and their addresses as well as the title details of the property.

Transfers must be for a form of consideration such as monetary value or love and affection, 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 paid.

© sorrapong | Getty Images

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) is to inform the land authorities that the bank has the beneficial ownership or charge over the property and in the event that 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 paid on the value of the loan.

Once the Memorandum of Transfer and MOC have been signed and stamped, and a requisite fee payment is made (usually RM100 each for the MOT and MOC), the documents along with the current land title will then be registered in the records of the land authorities. A revised title will be issued with the ownership and charge listed on the title.

NOTE: Titles that have been charged to a bank will be kept by the bank until the loan has been paid. Thereafter, the discharge procedure will be initiated by the borrower to have details of the bank 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 in 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 is where the developer doesn’t consent and a transfer of ownership from developer to seller and seller to new buyer would have to be done. This is a fairly lengthy process as two MOTs would have to be signed and registered and the title would have to 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, parent 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 people confuse between 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 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

The stamp duty for 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:

PRICE TIERSTAMP DUTY on SPA & MOT (% of property price)
First RM100,0001%
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 above rates took effect in 2019 and are still valid as of May 2022, hence there are no changes in MOT calculation 2021 and MOT calculation 2022.

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 using the Memorandum of Transfer fee calculator from reputable law firm, Low & Partners. It’s one of the best stamp duty MOT calculator 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 strata title stamp duty calculator.

What are the latest stamp duty exemptions in Malaysia?

Stamp Duty Exemption for First Time House Buyers from 1 January 2021 to 31 December 2025

Under Budget 2021, first-time house buyers for residential properties in both the primary and secondary markets valued under RM500,000, will receive the full stamp duty exemption on the memorandum of transfer documents (MOT) and loan agreements. Not having to pay stamp duties for a RM500,00 home will provide you with RM11,250 in savings!

Andrii Yalanskyi | 123rf

Stamp duty exemption under i-MILIKI

On 15 July 2022, the Malaysian government announced that first-time homebuyers will get a stamp duty exemption on the instrument of transfer and loan agreement under the Keluarga Malaysia Home Ownership Initiative (i-MILIKI).

i-MILIKI is a stamp duty exemption incentive that applies to instruments of transfers and loan agreements for the purchase of first houses in Malaysia.

For first-time homebuyers who are buying a home that’s valued at RM500,000 and below, they will get a 100% exemption, while properties over RM500,000 to RM1 million will get 50%.

The exemption will apply for sales and purchase agreements that are completed from 1 June 2022 to 31 December 2023.

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

As mentioned above, transfers of ownership between family members or loved ones would come under “love and affection” and are subject to certain exemptions on the stamp duty. Note however that this is only applicable to transfers between husband and wife, and parent and child.

Transfers between spouses will be exempted from stamp duty, while between parent and child, there is a 50% exemption.

Transfers between siblings or cousins or between boyfriends and girlfriends, however are subject to the full stamp duty rate.

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

The fee your lawyer will charge you for the Sale and Purchase Agreement in your property purchase is based on a scale that corresponds with the property value.

PRICE TIERLEGAL FEE (% of property price)
First RM500,0001%
Next 500,000 (RM500,001 – RM 1 million)0.8%
Following RM2,000,000 (RM1,000,001 – RM 3 million)0.7%
Next RM2,000,000 (RM3,000,001 – RM 5 million)0.6%
Thereafter (> RM 5 million)0.5%

Other costs that come under legal fees include land searches, land caveat fees, title issuance fees and other miscellaneous disbursements.

Valuation fee

This is applicable if you take a bank loan to finance the purchase of a property. All banks would require 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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