Tenancy Agreement Stamp Duty Fee Calculation Formula


If Google Search Engine leads you here, congrats you have been upgraded to become a new landlord or perhaps soon to be, for your first rental property!

Hunting and screening for a good tenant is not an easy task and I agree sometimes it depends on luck, too. We leave this topic first and to be discussed in my future post.

If you have gone through the process and secured an ideal tenant at a very good ROI rental rate, congratulate you, again!

Bear in mind, never rent your house without a tenancy agreement, I do not encourage doing so as I prefer to pay more tax for the extra rental income on top of my salary. It helps Mortgage officer to have more confidence to persuade their bank to approve my next home loan.

Remarks: If possible, instruct your tenant to bank in rental money into one particular bank savings account, easier for bank to identify the rent.

Then, it comes to our topic today, the formula to calculate stamp duty fee charged by government if your house is rented. Here is step-by-step calculation:

Step 1: Calculate the total of annual rental (e.g.: RM1,700 per month x 12 months = RM20,400)

Step 2: Calculate the taxable rental. The first RM2,400 of your annual rental is entitled for stamp duty exemption (e.g.: RM20,400 – RM2,400 = RM18,000)

Step 3: For every RM250 or part thereof in excess of RM2,400, different rates will be applied to calculate the payable Stamp Duty according to tenancy period as following:-

  • RM1 will be charged for tenancy period 1 year or less;
  • RM2 will be charged for tenancy period more than 1 year but equal to 3 years or less than 3 years;
  • RM4 will be charged for tenancy period exceeding 3 years or more.
RentalTenancy Period
(= or < 1 year)
Tenancy Period
(> 1 year, = or < 3 years)
Tenancy Period
(> 3 years)
First RM 2,400ExemptedExemptedExempted
Every RM 250 or part thereof in excess of RM2,400RM 1.00RM 2.00RM 4.00

Example 1: Tenancy Period = 1 year
Payable Stamp Duty,
= (RM18,000 / RM250)* x RM1
= 72 x RM1
= RM72

Example 2: Tenancy Period = 2 years
Payable Stamp Duty,
= (RM18,000 / RM250)* x RM2
= 72 x RM2
= RM144

Example 3: Tenancy Period 5 years
Payable Stamp Duty,
= (RM18,000 / RM250)* x RM4
= 72 x RM4
= RM288

*round-up figure

Step 4: For second copy of tenancy agreement, the stamping cost is RM10.

Total Cost Involved (for tenancy period of 1 year, DIY tenancy agreement),
= Stamp Duty + Stamping for 2nd Copy + Disbursement
= RM72 + RM10 + RM118
= RM200

If you get a lawyer to draft for a standard residential tenancy agreement, they might charge you from RM200 to RM400, depending on the rental rates and complexity of the agreement. To save cost, google it, there are a lot of sample in internet. Else, ask around your friends and colleagues, I’m sure some of them got it.

Who should bear the costs for preparing Tenancy Agreement, Stamp Duty and disbursement? Tenant or landlord? I have yet to get the firm answer from a reliable source. Your valuable input is much appreciated. But it is a common practice that tenant to absorb the costs.

{ 2 comments… read them below or add one }

jenny

Hi Horlic,
I rented out my office premise on and off for few years since 2006. Am I subject to income tax? and what is my tax payable? Other advises please.
Thank you.

Reply

Dave

Hi there, love the tips you have on your blog, its been really helpful.

just need some advice if you are able to, i have a apartment that is currently rented out, the tenant rented since 2 years ago, we agreed to have the contract verbally as 1 year. dont misunderstand, he’s a good tenant no problems at all, just that i’m not sure if i should do up a post dated tenancy agreement and have it stamped? should i date it from today onwards? is there a penalty for not having a stamped agreement even though i always report it in my income tax returns. but really its only RM600/month, so how should i approach this?

thanks so much..

Reply

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