• Standard Procedure to Buy
• Standard Procedure to Rent
• FIC Guidelines
• Stamp Duty
• Real Property Gain Tax

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Standard Procedure to Buy

1. Pay an earnest deposit of 3% PURCHASE PRICE upon signing of the Letter Of Offer / acceptance.
2. Pay 7% Purchase being the balance of 10% of the sale price within 14 days fromthe date of acceptance and upon signing the SALE and PURCHASE AGREEMENT.
3. Pay 90% of the remaining PURCHASE PRICE within the next 3 MONTHS from the signing date ofthe SALE and PURCHASE AGREEMENT.
4. Take possession of Property upon full payment.

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Standard Procedure to Rent

1. Pay 1 month of rental as the booking deposit upon signing of the Letter Of Offer / acceptance.
2. Signing of the Tenancy Agreement within the next 14 DAYS from date of acceptance and pay TWO (2) MONTHS rental as security deposit and 1/2 MONTH rental as utility deposit plus the stamping fees and disbursement fees.
3. Take possession of the Property.

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FIC Guidelines

The guidelines for foreigners to buy properties in Malaysia are as follows: -

1. Acquisition of properties costing less than RM10 million by Malaysian citizens is exempted from FIC approval. (Previous limit was RM5 million limit). The intention is to facilitate and expedite the completion of all transactions of less than RM10 million at State Authority level
2. The following property sale transactions of less than RM20 million need only be reported to the FIC Secretariat. In such cases, State Authority do not have to wait for FIC approval.
   1. Sale by Bumiputera to Bumiputera;
   2. Sale by non-Bumiputera to Bumiputera;
   3. Sale by non-Bumiputera to non-Bumiputera; and
   4. Sale by foreign interests to Malaysian citizens.
3. Foreign interests undertaking manufacturing activities who have secured exemption from manufacturing licenses from Ministry of International Trade and Industry, are allowed to own industrial lots or factories for manufacturing activities only. This is to facilitate acquisition of industrial properties by foreigners, without equity conditions, but for the purpose of manufacturing and not for rental.
4. Further relaxation of the 22 April 1998 Special Guidelines:
   • Foreigners are allowed to acquire all types of residential units, shop houses, office space and retail space in either old or newly launched projects costing more than RM250,000 each without having to set up a company with local equity. (Previously foreigners were only allowed to acquire properties in projects that had already been completed or 50% completed.)
   • Foreigners are allowed to obtain their funding for the above acquisitions from local sources (previously funding provided by external sources).
5. To encourage the establishment of headquarters or regional offices in Malaysia, foreign companies are allowed to own offices or office space, including for their branch offices (costing more than RM250,000 each) without any limit on the number of units they can any equity conditions.
6. Foreign companies incorporated in ASEAN countries intending to set up joint ventures or engage in trading and commercial activities in Malaysia are allowed to own office or office space (costing more than RM250,000) without any equity restrictions.
7. Residential Properties
   The latest government stimulus package announced in June 2003 allowed foreigners to purchase residential properties valued above RM150K instead of RM250K.

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Stamp Duty

The real estate industry is a billion ringgit industry and the Federal Government also wants a piece of the cake. It does this in the form of stamp duty on real estate transactions.

• Stamp Duty on Transfers
  All transfers of property attract stamp duty regardless whether the acquirer gives consideration for the transfer or not. Usually, acquirers of property pay money for the acquisition. But sometimes the acquisition may be way of gift.
  

  Value of Property	Rate of Stamp
  Up to RM 100,000	1%
  From RM 100,001 to RM 500,000	2%
  From RM 500,001 onwards	3%

• Stamp Duty on Charges
  A charge on property is an instrument created by statue, namely the NLC. It affords the Chargee a security for loan granted to the Chargor over the property charged.
  Stamp duty is calculated at the rate of about 0.5% of the loan amount.
• Stamp Duty on Leases and Tenancy Agreements
  First, calculate the total rent for one year Then, take away RM 2,400 from that total rent, because the first RM 2,400 is free from stamp duty.
  Next, calculate the stamp duty payable based on the following table:

  	When the Lease is for a period
  	Not exceeding one year	Exceeding one but not exceeding 3 years	Exceeding 3 years
  For every RM 250	1.00	2.00	4.00

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Real Property Gains Tax

The original purpose of the RPGT was to put a lid on property speculation. Today, it is still the main purpose but the RPGT also serves as a useful form of revenue for the Federal Government.

• RPGT chargeable on individuals:
  

  Category of Disposal	Rate of Tax
  Disposal within two years after the date of acquisition of the chargeable asset	30 per cent
  Disposal in the third year after the date of acquisition of the chargeable asset	20 per cent
  Disposal in the fourth year after the date of acquisition of the chargeable asset	15 per cent
  Disposal in the fifth year after the date of acquisition of the chargeable asset	5 per cent
  Disposal in the sixth year after the date of acquisition of the chargeable asset or thereafter	NIL

  
  
• RPGT chargeable on companies:
  

  Category of Disposal	Rate of Tax
  Disposal within two years after the date of acquisition of the chargeable asset	30 per cent
  Disposal in the third year after the date of acquisition of the chargeable asset	20 per cent
  Disposal in the fourth year after the date of acquisition of the chargeable asset	15 per cent
  Disposal in the fifth year after the date of acquisition of the chargeable asset or thereafter	5 per cent

  
  
• RPGT chargeable on foreigners:
  

  Category of Disposal	Rate of Tax
  Disposal within 5 years after the date of acquisition of the chargeable asset	30 per cent
  Disposal in the sixth year after the date of acquisition of the chargeable asset or thereafter	5 per cent

Income Tax

Income derived from properties, usually rent, attract income tax like any other forms of income.