Foreigners are permitted to own freehold or leasehold (99 years) residential property with the condition that the property value is not less than RM250,000. There is no restriction on the number of units owned by every foreigner. Foreigners are allowed to obtain mortgage from local bank and up to 80% financing margin.
2. Buying Process
The first step is to look for a licensed real estate agent to recommend properties. Once the property is selected, a Letter of offer / Acceptance will be signed with payment of booking deposit of 2%-3% of the transacted price. Then, the real estate agent will submit the documents to the lawyer for further action and at the same time to assist the buyer to obtain mortgage from local bank. The mortgage approval will take about few working days.
Within 14 days, the Sale and Purchase Agreement is signed. The buyer must pay another 7% deposit to the seller. From the date of the signing, the buyer has a maximum of three months to accomplish full payment.
The Sale and Purchase Agreement must be stamped at the Stamp Office. After the examination on the property of the valuation department, Stamp Duty is paid to the Stamp Office. The transfer must be registered at the Land Office Registry. If buy from developer’s off-the-plan project, the Stamp Duty will be payable upon the issuance of individual title or strata title. Before the issuance of the relevant title, resale of the property is still permitted.
3. Transaction Costs
Payable by Buyer
Stamp Duty
1st RM100,000 – 1%
Next RM400,000 – 2%
Residue – 3%
Stamp Duty
1st RM100,000 – 1%
Next RM400,000 – 2%
Residue – 3%
Lawyer / Solicitor’s Fees
Lawyer / Solicitor is required to prepare Sale & Purchase Agreement, Loan Agreement and other relevant documents in the property transaction. The total fee incurred is in the range of 1%-2% of the property transacted price.
If buyer from developer’s off-the-plan project, the buyers are usually not required to bear the legal fee.
Payable by Seller
Lawyer / Solicitor is required to prepare Sale & Purchase Agreement, Loan Agreement and other relevant documents in the property transaction. The total fee incurred is in the range of 1%-2% of the property transacted price.
If buyer from developer’s off-the-plan project, the buyers are usually not required to bear the legal fee.
Payable by Seller
Lawyer / Solicitor’s Fee
Seller may appoint his own lawyer to handle the property transaction to protect his interest. Under normal circumstances, the seller will let the buyer’s lawyer to handle the transaction and thus the seller is only required to pay a small amount of fee that is usually less than 1% of the transacted price.
Seller may appoint his own lawyer to handle the property transaction to protect his interest. Under normal circumstances, the seller will let the buyer’s lawyer to handle the transaction and thus the seller is only required to pay a small amount of fee that is usually less than 1% of the transacted price.
Real estate Agency Fee
The seller may appoint a licensed real estate agent to secure buyer for the property.
The seller may appoint a licensed real estate agent to secure buyer for the property.
Agency fee is as follows
1st RM500,000 – 2.75%
Residue - 2%
4. Taxation
Property Taxes
i) Assessment Tax on Residential Property
The assessment tax is a local tax based on the annual rental value of the property, as assessed by the local authorities. It is generally levied at a flat rate of 6% for residential properties and payable in two installments.
1st RM500,000 – 2.75%
Residue - 2%
4. Taxation
Property Taxes
i) Assessment Tax on Residential Property
The assessment tax is a local tax based on the annual rental value of the property, as assessed by the local authorities. It is generally levied at a flat rate of 6% for residential properties and payable in two installments.
ii) Quit Rent
The quit rent is a local tax levied on all landed properties, payable annually at a rate of 1 sen to 2 sen per square foot, wherein RM1 is equal to 100 sen (cents). The quit rent liability is generally estimated to be less than RM100 (US$31) per year.
Income Tax
Non-resident individuals earning rental income in the country are liable to pay tax at a rate of 28% on net income. Income-generating expenses are deductible from the gross rent such as interest expense, cost of repairs, assessment tax, quit rent, and agent’s commission. Depreciation does not qualify for tax deductions against income, and capital allowances are not available for residential and commercial buildings.
The quit rent is a local tax levied on all landed properties, payable annually at a rate of 1 sen to 2 sen per square foot, wherein RM1 is equal to 100 sen (cents). The quit rent liability is generally estimated to be less than RM100 (US$31) per year.
Income Tax
Non-resident individuals earning rental income in the country are liable to pay tax at a rate of 28% on net income. Income-generating expenses are deductible from the gross rent such as interest expense, cost of repairs, assessment tax, quit rent, and agent’s commission. Depreciation does not qualify for tax deductions against income, and capital allowances are not available for residential and commercial buildings.
Capital Gain Tax
As of 01 April 2007, there is no capital gains tax.
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