Latest stamp duty charges, RPGT, legal fees & 4 other costs to consider before buying a house in 2021


*This article was updated on 17th June 2021. 

Home buyers can look forward to full stamp duty exemptions on the Instrument of Transfer (MOT) and Instrument on Loan Agreement for new launch properties bought under the HOC 2020 (Home Ownership Campaign).  The stamp duty exemptions have been extended to the subsale market too as recently announced under Budget 2021.

© baona | Getty Images

Hunting for a dream home is an experience that a first-time home buyer is not likely to forget. However, you might overlook certain critical elements in calculating the total expenditure of acquiring your home.

First-time home buyers scouting around at various locations, either by visiting the development or by browsing online, are likely to focus only on the biggest expenditure involved – the selling prices of units. You might be further enticed by promotions, discounts and rebates by developers. However, it is not just the 10% deposit and progress billings that will make up your total costs.

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There are other important costs in the home purchasing process that you need to factor in, especially towards the end of the transaction. These are variable, third-party fees that are often referred to as closing costs. Ignore them and you may risk financial setbacks and disappointment in realising your dreams of owning a home.

Below are a few significant closing costs that you need to include in your property budget planning:   

1. Stamp duty

An unavoidable cost in real estate purchases, stamp duty is the tax placed on your property documents during the sale or transfer of the property – as specified under the First Schedule of Stamp Duty Act 1949. The tax includes stamp duty on the Sale and Purchase Agreements (SPA) of your property and stamp duty for the Memorandum of Transfer (MOT), both of which are calculated based on the purchase price. You will also need to pay stamp duty on your loan agreement based on a flat rate of 0.5% of the total loan. 

The sale or transfer of properties in Malaysia which are chargeable with stamp duty must be stamped within 30 days from the date of the execution (property transaction)

During Budget 2019, the government announced a stamp duty hike for properties costing more than RM1 million, where the rate was increased from 3% to 4% – this came into effect on 1 July 2019. The latest stamp duty rates on the SPA & MOT are calculated on a tiered basis as below.

PRICE TIER STAMP DUTY (% 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%

How is stamp duty calculated in Malaysia?

For instance, when purchasing a property which costs RM750,000, you will have to pay a total of:

{(First RM100,000 X 1%) + (Next RM400,000 X 2%) + (Remaining RM250,000 X 3%) } + 0.5% of loan amount (90% of RM750,000)
= {RM1,000 + RM8,000 + RM7,500} + 0.5% X (RM675,000)
= RM16,500 + RM3,375

New Stamp Duty Exemptions in 2021

However, there are a few new stamp duty exemptions available for homebuyers – PM Tan Sri Muhyiddin Yassin announced during the short-term economic recovery plan (PENJANA) briefing on 5 June 2020 that the government will be bringing back the HOC which initially ended in December 2019. It was reintroduced in June 2020 and made available until 31st May 2021.

The government recently further extended the HOC to 31 December 2021 due to the ongoing Covid-19 pandemic and Full Movement Control Order (FMCO). Home buyers will get to enjoy stamp duty waivers for the purchase of new launch properties priced between RM300,000 and RM2.5 million.

Details of the available stamp duty waivers are as below:

 Property Purchase Price Terms Stamp Duty Exemption

Properties purchased under the HOC 2020

RM300,000 < PPP ≤ RM1 mil


1) SPA Date: 1 June 2020 – 31 December 2021
2) Malaysian citizen  
3) Purchase of residential property – Does not include SOHO, SOVO, SOFO & serviced residences built for commercial use. 
4) Residential properties in the primary market (homes that have been launched or completed)

Full stamp duty exemption on both Instrument on Transfer (14A/DOA)  and Instrument on Loan Agreement 

Properties purchased under the HOC 2020

RM1 mil <PPP ≤ RM2.5 mil

1) SPA Date: 1 June 2020 – 31 December 2021
Malaysian citizen
Purchase of residential property – Does not include SOHO, SOVO, SOFO & serviced residences built for commercial use. 
Residential properties in the primary market (homes that have been launched or completed)

For Instrument on Transfer – Adoption of old stamp duty rate of 3% (not 4%) for the “Thereafter (> RM 1 million)” tier. 

For Instrument on Loan Agreement – Full stamp duty exemption

RM300,000 < PPP ≤ RM500,000


1) SPA Date: 1 July 2019 – 31 December 2020
2) Purchase 1 residential property (house, condo unit, apartment, flat)
3) Malaysian citizen & first time home buyer
Full stamp duty exemption on transfer instrument and loan agreement for the first RM300,000 only. The remaining amount will be subjected to the prevailing rate of stamp duty. 
PPP ≤ RM300,000 1) SPA Date: 1 January 2019 – 31 December 2020
2) Purchase 1 residential property (a house, condo unit, an apartment, a flat)
3) Malaysian citizen & first time home buyer
Full stamp duty exemption on transfer instrument and loan agreement (14A/DOA) 

Budget 2021 Stamp Duty Exemption For First-Time Buyers

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz announced during the tabling of Budget 2021 on 6 November that stamp duty exemptions on the memorandum of transfer documents (MOT) and loan agreements will be provided for first-time home buyers. The exemption will apply for the purchase of a residential property from 1 January 2021 to 31 December 2025, for homes priced up to RM500,000. It was stated that the Sales and Purchase Agreement (SPA) must be executed and signed within the stipulated period.

A full stamp duty exemption on a RM500,000 home will provide you RM11,250 in savings!

The government announced more stamp duty exemptions during the tabling of Budget 2021 – Find out what are the 4 Incentives Malaysian house buyers can look forward to in 2021

2. Legal fees


© bee32 | 123rf

Unless you have a legal background and possess some of the required expertise and knowledge, you are most likely to engage in legal assistance for your real estate purchase. Your appointed solicitor will prepare all the necessary documents and contracts to facilitate the transfer of the property.

The legal fees for preparation of the Sale and Purchase Agreement are calculated as a percentage of the purchase price, varying from 0.25% up to 1% depending on the value of the homes.

How are legal fees calculated in Malaysia?

The legal fee rates in Malaysia are as below:

PRICE TIER LEGAL FEE (% of property price)
First RM500,000 1%
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%

Say for instance you are purchasing a residential property which costs RM750,000, you will have to pay a total of:

(First RM500,000 X 1%) + (Next RM250,000 X 0.8%) 
= RM5,000 + RM2,000 
= RM7,000 

Note that some developers may absorb the legal fees but you will always need to pay the stamp duty yourself as a buyer.

 3. Real Property Gains Tax (RPGT)


© Andriy Popov | 123rf

A buyer with long term planning, beyond owning a first home, should also look ahead to the possibility of eventually selling the property in the future.

This might be for a number of reasons. For example, you might want to upgrade, leave the area for a new job, find a home better suited to your preference or just sell it for financial purposes because the market is booming. Regardless, disposing your home to a new buyer will also entail paying real property gains tax (RPGT) if you are profiting from the transaction.

Doing advance research on RPGT could help you sell your property at the right time and save you a lot of money!

Beginning 1 January 2019, Malaysian individuals who sell off their residential property in the sixth (and subsequent) years of ownership will now have to pay a 5% RPGT (no charges were applied before). Meanwhile, those who dispose of their home after less than 3 years will be charged 30% RPGT; 20% in year 4 and 15% in year 5. 

Bear in mind that there are RPGT exemptions for the following conditions:

1) An exemption of 10% of profits or RM10,000 per transaction (whichever is higher) for these 2 scenarios:

Malaysian Citizens & Permanent Residents
a) If an asset is transferred as a gift by a donor who is a Malaysian citizen and the acquirers are either husband and wife, parent and children or grandparents and grandchildren. This exemption is not applicable for transfers between siblings.
b) Once in a lifetime exemption on the chargeable gain on disposal of 1 private residence by a Malaysian citizen or Permanent Resident (PR).

2)  Homeowners who own low or medium cost housing priced below RM200,000 are exempted from RPGT when disposing of their property.

RPGT amendments in 2020

In the recent Budget 2020,  the government made an amendment to the RPGT – Beginning 1 January 2020, for the disposal of older properties which were bought years ago, the base year used to calculate the property gains tax chargeable on its profit from the sale is 1 January 2013.  Previously, 1 January 2020 was used as the initial point of valuation (base year). The base year amendment to 2013 is good news for homeowners as they will now pay less tax upon selling off their property. 

Meanwhile on 5 June 2020, the PM announced that the government will be introducing RPGT exemptions for disposal of residential homes from June 1, 2020 to December 31, 2021 where the exemption is limited to the disposal of three units of residential homes per individual. However, it has not been clarified whether the exemption will be made available for all disposals or only for disposals of properties in the sixth and subsequent years of ownership – This information will be updated accordingly as soon as we receive news from the Government.

READ: What is RPGT Malaysia and how to calculate RPGT in Malaysia?

CHECK OUT: A beginner’s guide to the Memorandum of Transfer (MOT) and Stamp Duty in Malaysia

4. Property agent fees

real estate agent house

© 123rf

If you engage property or real estate agents, especially in securing residential property in the secondary market, their fees will be an additional cost on top of the price you pay for your home. Although most buyers nowadays are aware of this, there are some who do not factor agent fees in the total cost. This could be a setback, especially if you are on a tight budget.

The maximum fee chargeable on services provided by agents on the sale of any land and building is normally 3%, although many brokers and agents charge less than that on a case-to-case basis.

As a buyer, make sure that you negotiate and confirm your estate agent fees before officially engaging them to represent you in any property transactions. This will help when calculating your total cost in advance.

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5. Property valuation fees

Unless you’re paying for the property in cash, you’re likely to be looking for a housing loan from banks to fund the purchase. Financial institutions will usually require a valuation of the property before approving the loan amount, and most banks will charge a fee for these valuations.

How are valuation fees calculated?

Similar to the legal fees, the valuation fee for real estate is calculated as a percentage of the purchase price:

For the first RM100,000 =0.25%
Next residue up to RM2 million = 0.2%

MORE: Am I eligible for Rumah Selangorku (RSKU)?

6. Home insurance 


© Getty Images

Most banks will require buyers to purchase insurance on their homes as part of the housing loan package to protect the value of the property. This type of insurance is usually referred to as the Mortgage Reducing Term Assurance (MRTA) and its costs are dependent on the age of the borrower (usually the older the borrower, the higher the MRTA) and the total mortgage on the property (usually estimated at 3% to 5% of the total mortgage). 

The MRTA isn’t the only option, however, homeowners can also consider Mortgage Level Term Assurance (MLTA), which offers the repayment of your outstanding home loan amount as well as a guaranteed cash value back at the end of the scheme.

7. Home renovations

For example, after you have completed the purchase of the house, you might want to change wall colours, doors, floorings, windows, fences, roofing, rooms and other elements of the house to suit your preferences. These could easily add up to your total costs, depending on whether the renovations involved are major or minor.

Here’s a tip: Most experts recommend not spending more than 10% of your home value on renovations. Check out our simple guide on how to plan your home renovation.

Are you looking for great property deals? Search for your dream home from this list of new projects starting from RM 266,000!


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