Stamp duty relief for first-time home buyers gazetted
23 June 2023
One of the initiatives announced by the Minister of Finance (‘
Minister’) in the Malaysian Budget 2023 Speech on 24 February 2023 to encourage home ownership was to grant to first-time home owners full stamp duty exemption for the instrument of transfer and loan agreement for homes valued at RM500,000 and below until end-2025, and 75% stamp duty remission for the instrument of transfer and loan agreement for homes valued from RM500,001 to RM1,000,000 until 31 December 2023.
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The following subsidiary legislation in respect of Malaysian Home Ownership Initiative (iMiliki) under the Home Ownership Programme 2022/2023 (‘
iMiliki Initiative 2022/2023’) were gazetted on 9 June 2023 to give effect to the foregoing initiatives:
All of the above-referred subsidiary legislation (‘Orders’) are deemed to have come into operation on 1 June 2023.
The exemptions and remissions
E.O. 1/2023 exempts from stamp duty any loan agreement to finance the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is not more than RM500,000, executed between an individual named in the sale and purchase agreement for the purchase of a residential property (‘SPA’) and any of the financial institutions listed in sub-paragraphs (1)(a) to (1)(i) of Paragraph 2 of E.O. 1/2023.
E.O. 2/2023 exempts from stamp duty any instrument of transfer for the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is not more than RM500,000, executed by an individual.
R.O. 1/2023 remits 75% of the stamp duty chargeable on any loan agreement to finance the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is more than RM500,000 but not more than RM1,000,000, executed between an individual named in the SPA and any of the financial institutions listed in sub-paragraphs (1)(a) to (1)(i) of Paragraph 2 of R.O. 1/2023.
R.O. 2/2023 remits 75% of the stamp duty chargeable on any instrument of transfer for the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is more than RM500,000 but not more than RM1,000,000, executed by an individual.
Common conditions
The exemptions and remissions under the Orders shall only apply if the following conditions are satisfied:
- the SPA is between an individual and a property developer;
- the purchase price in the SPA is a price after a discount of at least 10% from the original price offered by the property developer as approved in the Advertising and Sales Permit under the Housing Development (Control and Licensing) Act 1966, the Housing Development (Control and Licensing) Enactment 1978 of Sabah or Housing Development (Control and Licensing) Ordinance 2013 of Sarawak (severally the ‘relevant housing development law’), except where the residential property is subject to controlled pricing;
- the SPA is executed on or after 1 June 2022 but not later than 31 December 2023 and is duly stamped no later than 31 January 2024; and
- the individual has never owned any residential property, including a residential property which is obtained by inheritance or gift, which is held either individually or jointly.
Supporting documents
The application for stamp duty relief under the Orders must be accompanied by a statutory declaration by:
- the property developer confirming the grant of a discount of at least 10% from the original price offered by the property developer as approved in the Advertising and Sales Permit under the relevant housing development law, except for a residential property which is subject to controlled pricing; and
- the individual named in the SPA confirming that he or she has never owned any residential property including a residential property which is obtained by way of inheritance or gift, which is held either individually or jointly.
Common terminology
For the purposes of the Orders:
- ‘individual’ means a purchaser who is a Malaysian citizen or co-purchasers who are Malaysian citizens;
- ‘residential property’ means a house, condominium unit, an apartment or a flat purchased or obtained solely to be used as a dwelling house and includes a service apartment and small office home office (SOHO) for which the property developer has obtained an approval for a Developer’s Licence and Advertising and Sales Permit under the relevant housing development law,
and for the purposes of E.O. 2/2023 and R.O. 2/2023, the value of the residential property shall be based on the market value.
Comments
The Orders will be welcomed by eligible first-time home owners as the exemptions and remissions granted under the Orders will result in significant savings in the costs of acquiring and financing the residential property. The Orders will also be welcomed by property developers as the stamp duty relief granted by the Government may boost the sale of their residential properties.
The Minister had indicated in his budget speech that the stamp duty exemptions for homes valued at not more than RM500,000 are to be effective until end-2025. However, E.O 1/2023 and E.O. 2/2023 provide that the SPA is to be executed no later than 31 December 2023. Perhaps E.O. 1/2023 and E.O. 2/2023 will be extended or be replaced by new exemption orders that will give full effect to the initiative announced by the Minister.
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Alert prepared by Jesy Ooi (Partner) and Engy Tan (Senior Associate) of the Real Estate Practice of Skrine.
1 See paragraph 204 at page 57 and paragraph 6 at page 97 of the Malaysian Budget 2023 Speech.
2 It is to be noted that Stamp Duty (Exemption) Order 2021 [P.U.(A) 53/2021] and Stamp Duty (Exemption) (No.2) Order 2021 [P.U.(A) 54/2021] provide full exemption of stamp duty for instruments of transfer and loan agreements respectively relating to the purchase of a residential property having a market value not exceeding RM500,000 by a first-time home buyer provided that the sale and purchase agreement is executed on or after 1 January 2021 but no later than 31 December 2025. There is no requirement under these exemption orders for the property to be purchased from a developer or for any discount to be given by a developer.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.