Loan Agreement Stamp Duty in Malaysia: the 0.5% You Also Pay

Two instruments, two stamp duties

A financed property purchase produces two dutiable documents under the Stamp Act 1949, and each is assessed on its own. The transfer instrument (MOT, or Form 14A) moves the title into your name and is charged on the property's price or market value using the tiered ad valorem scale. The loan or facility agreement between you and the bank is a separate instrument, charged on the loan amount — not the property price.

Because they are assessed separately, a bigger loan raises your loan-agreement duty even if the purchase price is fixed. Paying a larger deposit shrinks the loan and therefore this 0.5% charge, while the MOT duty stays the same.

Loan agreement stamp duty is a flat 0.5%

Unlike the transfer duty, the loan agreement duty is not tiered. It is a single ad valorem rate of 0.5% of the total loan (facility) sum, whatever the amount. Borrow RM300,000 and the duty is RM1,500; borrow RM800,000 and it is RM4,000. The bank's panel solicitor prepares and stamps the loan documents, and the duty is collected from you as part of the loan disbursement, alongside the legal fees and disbursements for the facility agreement.

The MOT transfer duty for comparison

The transfer (MOT) duty is charged on bands of the purchase price: 1% on the first RM100,000, 2% on the next RM400,000, 3% on the next RM500,000, and 4% on anything above RM1,000,000. This is the larger of the two charges on most purchases, and it is what the stamp duty calculator below computes. The loan agreement's flat 0.5% then applies on top, on the financed portion only.

Worked example: the total stamp duty

Take an RM500,000 home bought with a 90% loan of RM450,000. The MOT duty is 1% × RM100,000 (RM1,000) plus 2% × RM400,000 (RM8,000) = RM9,000. The loan agreement duty is 0.5% × RM450,000 = RM2,250. Your total stamp duty is about RM11,250 — and the RM2,250 loan portion is the part buyers most often leave out of their upfront-cash estimate. Add the SPA and loan legal fees and disbursements on top to get the true cash needed at completion.

First-home exemptions can remove both

Malaysia has repeatedly offered stamp-duty relief for first-time buyers covering both the MOT and the loan agreement. The typical structure is a full exemption on properties up to a set price ceiling and a partial exemption on a band above it, available only to Malaysian citizens buying their first residential property and conditional on the sale-and-purchase agreement being signed within the qualifying window announced in the Budget.

Because the price ceilings, the exempt percentage and the qualifying dates are reset at almost every Budget, treat any specific figure you read as time-sensitive. Confirm the exemption in force for your SPA date on the LHDN website (hasil.gov.my) or with your conveyancing solicitor before assuming you qualify.

Important caveats

This guide covers the two ad valorem stamp duties on a standard financed residential purchase; it is general information, not legal or tax advice. Refinancing, Islamic financing (which may attract remissions), sub-sale versus developer purchases, and joint borrowers can all change the picture. The calculator below computes the MOT transfer duty from the price — add 0.5% of your loan for the financing agreement, and verify the current rates and any exemption against LHDN before you commit.