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Frequently Asked Questions
Real Property Gain Tax
Capital gains are generally not subject to income tax in Malaysia.However, real property gains tax is charged on chargeable gains arising from the disposal of real property situated in Malaysia or of interest, options or other rights in or over such land as well as the disposal of shares in real property companies.
Effective from 1 January 2012, gains from the disposal of residential and commercial properties are taxed between 0% and 10% depending on the holding period of real properties as follows:
|Holding Period||RPGT Rates|
|Companies||Individual (Citizen & PR)||Individual (Non-Citizen)|
|Up to 2 years||10%||10%||10%|
|Exceeding 2 until 5 years||5%||5%||5%|
|Exceeding 5 years||0%||0%||0%|
Thw RPGT rates will not burden genuine property onwers as they are given exemption and the payment of RPGT is based on net gains as follows:
i. RPGT exemption on net gains from the disposal of one unit residential property once in a lifetime by an individual who is a citizen or a permanent resident of Malaysia;
ii. RPGT exemption on gains from disposal of property between parents and children, husband and wife, grandparents and grandchildren;
iii. RPGT is charged only on net gains after deducting all related costs such as purchase price, renovation costs and incidental cost e.g legal fees; and
iv. Exemption up to RM10,000 or 10% of the net gains, whichever is higher, is given to an indivdual.
For further information on company and individual tax, visit www.hasil.gov.my.
In Malaysia, the agent can only collect commission from¬†one party.¬†It is a standard industry practice that the landlord/vendor/seller pays the agent's commission.¬†
The tenant is responsible for maintaining the leased premises, carrying out minor repairs at their own cost such as the replacement of light bulbs, changing water filter cartridges etc.¬†
Only major repairs and maintenance would be the landlord's responsibility provided that the damage or malfunction of appliances is not caused by the tenant's negligence.
The tenant will have to take up a service contract with an external service provider¬†for¬†air-conditioning, gardening, pest control¬†and¬†pool equipment general servicing.
"Fully furnished" means the apartment or house you are renting comes with all the built-in and loose furniture, white goods (refrigerator, washer and dryer) and all other essential electric appliances.
"Partially furnished" apartments or house usually only comes with white goods, curtains, lightings, wardrobes and kitchen cabinet.
Although a house may be partially furnished at the time of viewing, you can always request the landlord to fully furnish it or request him to get specific household items you may require. All these are done during the negotiation period and will subsequently determine the final rental amount.
The standard lease period is 1 to 2 years (subject to individual landlords' requirements) and with or without an option to renew the lease. The lease renewal is usually for another 1 to 2 years and subject to a mutually agreed rental amount at the end of the tenancy. For lease renewal option, the landlord would normally require that you give 2 or 3 months' advance notice of your intention to renew. Most landlords do not accept leases that are less than 1 year period.
In Malaysia, the standard practice is:
- 2 months security deposit
- 1 month advance rental
- ½ month utility deposit
- Reimbursement of the Tenancy Agreement stamping fee
When the lease term ends, the security and utility deposit will be refunded without interest. However, the landlord reserves the right to deduct from the deposit all costs and expenses arising from the tenant for breaching any of the covenants stated in the Tenancy Agreement.
This is the booking deposit and is usually one month's rent in amount. After the landlord signs the Letter of Offer to Rent and accepts this deposit, he is obliged not to rent the property to other party. This deposit will become part of the security deposit or advance rental payment in the Tenancy Agreement.
You need to pay the one month's rental as an Earnest Deposit as consideration and to confirm the rental and sign the Letter of Offer to Rent. This documents shalll be prepared by the agent. The Letter of Offer to Rent shall state all the basic terms and conditions of the rental and your requirements to the Landlord.
Your agent will then ask the Landlord to sign the Letter of Offer to Rent before preparing the Tenancy Agreement.
In a standard tenancy agreement the monthly rental DOES NOT INCLUDE:
- Electricity Bill
- Gas Bill
- Water Bill
- Sewerage Bill (RM8 per month)
- Astro Bill (Cable TV – approx. RM60 to RM120 subject to the package selected)
- Pool Maintenance (if applicable)
- Garden Maintenance (if applicable)
- Fixed Phone line monthly subscription and charges (approx. RM26 per month - Telekom)
- Internet monthly subscription (from. RM 88 per month – Telekom)
- Air conditioners general servicing
- Pest Control Services (if applicable)
The two main important factors are location and budget. Deciding on the right location is very important as it determines the convenience for your family, e.g proximity to international schools, recreational and shopping facilities, and yourself. Your Housing Budget should be carefully assessed to ensure affordability and the type of housing form (landed house, serviced apartments or private condominiums, etc) that is suitable for you and your family. Landed houses (e.g bungalows, villas and semi-detached houses) in the tropics usually require more personal attention than high rise apartments/flats in terms of landscape and building maintenance.
A title is a legal document which certifies the ownership of a property. It provides name of registered property owner, boundaries of the property as well as its dimensions and area.¬†An individual title is issued to a landed property such as a house (terrace, semi-detached, bungalow, villa) which has its own land.¬†Strata titles are issued for individual units in high-rise properties (e.g condominiums, serviced apartments, offices, retails complex, etc) certifying ownership, dimensions and area of the each property unit. In strata titled properties, common areas such as corridors, club house, outdoor recreational facilities, roads, mechanical & electrical facilities, etc., known as Common Property is owned by the Management Corporation, a body comprising owners of the entire strata development and determined by the share values (Unit Share) of their respective properties. This share value is usually determined by the built-up floor area of their respective properties.¬†
For sale of strata properties prior to the issuance of individual strata titles such sale can be executed via an instrument known as Deed of Assisgment. As the name suggest, this piece of legal instrument ASSIGNS all interests, rights, covenants and obligations attached to the subject property from the Vendor/Seller to the new Purchaser.¬†This includes any Mutual Covenants that the Vendor/Seller might have entered into with the Developer or the previous Vendor/Seller from whom he had purchased the subject property earlier.¬†It is important to note that some leasehold strata titled properties have a "Restriction of Transfer."¬†This encumbrance is usually in the form of a requirement for such transfer (or sale) to be approved by the Land Office of the respective District where the property is located.
It is highly advisable for the Purchaser to engage the services of a conveyancing legal profesional to manage the various legal documentations necessary for submission to the various local authorities and finance company for the legal completion of the Sales and Purchase Agreement.
The other miscellaneous costs are:
- Legal fees: 1% for the first RM100,000, 0.5% for the next RM4,900,000
- Property stamp duty: 1% for the first RM100,000, 2% for the next RM400,000 or part thereof and 3% for any amount in excess of RM500,000
- Loan agreement stamp duty: 0.5% of loan amount transfer
- Disbursement fees including fees for the registration of charge, land search and bankruptcy search (RM300–700 in Wilayah Persekutuan and Selangor)
- Processing fee: one-time fee charged by the financial institution for loan processing (RM50-1,000)
Make an official offer to buy via a¬†Letter of Offer to Purchase.¬†Get the confirmation of sale from the Vendor/Seller by his signing this document and acknowledgement of acceptance your Earnest Deposit paid to him (usually between 2% or 3% of the Agreed Purchase Price.¬†The Earnest Deposit may be kept by the Real Estate Agent¬†as a stakeholder until the Sale and Purchase Agreement (S&P) has been duly signed.
You should engage a legal firm specialising in conveyancing to prepare the terms and conditions of the S&P and to complete it within 14 days from the date of the Letter of Offer to Purhcase. S&P must be signed by both parties by this dateline. You should then pay to the Vendor/Seller the 10% Deposit of Purchase Price less the amount of Earnest Deposit given at the 'Letter of Offer to Purchase' stage.
You should submit all relevant documents to the banks to process your mortgage loan if you do not intend to pay cash for the purchase of the property.¬†Completion of the whole transaction will usually take¬†place within 3 months of the S&P submission (or state authority consent, if applicable) but may be quicker if you pay¬†by¬†cash or if¬†the Vendor/Seller does not have any existing mortgage loans secured on the property.¬†You will pay¬†the balance 90% of the Purchase Price to the Vendor/Seller and collect the keys to your new property for complete handover!