Tenancy Agreement Stamp Duty Payment: What You Need to Know
When it comes to renting or leasing a property, one important consideration for both landlords and tenants is the tenancy agreement. This document outlines the terms and conditions of the rental arrangement and provides legal protection for both parties. However, in some cases, there may be an additional cost associated with creating and signing a tenancy agreement: stamp duty.
What is Stamp Duty?
Stamp duty is a tax levied by the government on certain legal documents, including property-related agreements like tenancy agreements. The amount of stamp duty payable depends on the value of the property being rented or leased, as well as the length of the tenancy agreement.
In Malaysia, the stamp duty rate for tenancy agreements is calculated based on the following:
1. For the first RM 2,400 of the yearly rental amount: No stamp duty is required.
2. For yearly rental amounts between RM 2,401 and RM 5,000: Stamp duty is RM 1.
3. For yearly rental amounts between RM 5,001 and RM 10,000: Stamp duty is RM 2.
4. For yearly rental amounts above RM 10,000: Stamp duty is RM 2 for every RM 1,000 or part thereof.
For example, if the yearly rental amount for a property is RM 12,000, the stamp duty payable for the tenancy agreement would be calculated as follows:
– RM 2,400 (0% stamp duty)
– RM 2,600 (RM 1 stamp duty)
– RM 5,000 (RM 2 stamp duty)
– RM 2,000 (RM 2 stamp duty for every RM 1,000 or part thereof)
Total stamp duty payable: RM 11.
Who is Responsible for Paying Stamp Duty on the Tenancy Agreement?
Under the law, both the landlord and the tenant are jointly responsible for paying the stamp duty on the tenancy agreement. However, it is common practice for the tenant to bear the cost of the stamp duty.
It is important to note that the tenancy agreement must be stamped within 30 days of the date of signing. Failure to do so may result in a fine or penalty.
How to Pay Stamp Duty on the Tenancy Agreement?
Stamp duty can be paid at any branch of the Inland Revenue Board of Malaysia (LHDN) or through e-payment on the LHDN website. The following documents are required for stamping:
– Original tenancy agreement
– Photocopy of the identity card or passport of the tenant and landlord
– Proof of payment of the stamp duty
It is recommended to make a copy of the stamped agreement for both the tenant and the landlord`s records.
Stamp duty is an additional cost that should be taken into consideration when renting or leasing a property in Malaysia. While the amount payable is relatively small, it is important to comply with the law and stamp the tenancy agreement within 30 days of signing. By doing so, both the landlord and the tenant can ensure that their agreement is legally binding and provides adequate protection for their respective rights and interests.