If You Are Considering Overseas Property - MALAYSIA

Property Tenure/ Ownership

	♦	Freehold
	♦	Leasehold      [Term not more than 99 years]

Ownership of property is denoted by a register title.

Title Deed

An entire piece of land during construction and development phase will most probably fall under a single “Master Title”

Normally, multiple houses or apartments would be built on this land and sold off individually. After the subdivision, the individual lots will fall under a new title.
For landed properties    : Individual Title
For high-rise properties : Strata Title

Transfer of Ownership

A memorandum of transfer has to be filed in order to transfer ownership.

Purchase Price (RM)     Fees  (% from purchase price)     Stamp Duty     First 100k   1%   RM0 – RM1,000     Next 400k   2%   RM1,001 – RM9,000     Exceed 500k   3%   from RM9,000

Notable Locations

	Kuala Lumpur :	KLCC, Mont Kiara, Bangsar, Damansara, Cyberjaya, Kenny Hill
	Penang :	George Town, Batu Ferringhi
	Johor :	Iskandhar

Restriction on ownership

For non-residents investing in real estate, they must purchase properties that are worth at least RM1 million. If they purchase landed property in Penang, the value has to be at least RM2 million.

Foreigner’s ownership quota on Johor properties

Type Of Property        %        Residential     Double Storey Terrace House     20     Double Storey Cluster House     20     Double Storey Semi-Detached     30     Bungalow (Double Storey)     30     Lot for Bungalow     30     Condominium / Apartment     50     Holiday Home     50     Commercial     3 Storey Shop/Office     10     Office Space     20

Financial Regulations

Loan-to-Value(LTV) Limits

	Non-Singaporean foreigners :	60% of Purchase price
	Singaporeans :	80% of Purchase price
	Locals :	90% of Purchase price

For Johor properties; however, the LTV limits are different.

Loan-to-Value (LTV) Limits (JOHOR)

	Non-Singaporean foreigners :	50-60% of Purchase price
	Singaporeans :	70% of Purchase price
	Locals :	80% of Purchase price

Loan Tenure

35 years or age of 70 years      [whichever is earlier]

Interest Rate

Base Lending Rate(BLR in short) – (fixed rate)= interest rate

The Base Lending Rate (BLR) is a minimum interest rate calculated by financial institutions based on a certain formula. This formula takes into account the institutions cost of funds and other administrative costs.

The current BLR is 6.6%, fixed rate ranges from 2.1%-2.4%.

Upfront Costs

Fees and other costs that a buyer incurs upon property transaction are known as upfront costs. When investing in Malaysian properties, some of the upfront costs include:

Foreign Investment Committee/ State Consent Costs

	Johor :	2% of Purchase price
	Other States :	RM2000 (estimation)

Sales and Purchase Agreement [SPA] legal fee

	RM150,000 - 00 or below	- 1% (minimum fee is RM300)
	RM150,001 - RM1,000,000	- 0.7%
	RM1,000,001 - RM3,000,000	- 0.6%
	RM3,000,001 - RM5,000,000	- 0.5%
	RM5,000,001 - RM7,500,000	- 0.4%
	> RM7,500,000	- Negotiable but shall not exceed 0.4%

Stamping of loan agreement

0.5% of loan amount

Loan legal fees (Based on loan amount)

	RM0 - RM150,000	1%
	RM150,001 - RM1,000,000	0.7%
	RM1,000,001 - RM2,000,000	0.6%
	RM2,000,000 & above	0.5%
	Additional RM600 charged for miscellaneous fees.

Holding Costs

	Maintenance & Sinking Fund :	(0.3cents- 0.45cents) per square foot
	Tenancy Management Fee :	5%-8% of gross rental

FEES     MYR ($)     Stamping fee (per document)     10     Adjudication fee     10     Search fee     60     Registration fee     100     Total     100    TRANSACTION COSTS (Based on purchase price)    Who Pays?     Stamp Duty   1% - 3%   buyer   Lawyer/Solicitor's Fees   0.4% - 1%   buyer   Other Fees   RM180   buyer   Real Estate Agent´s Fees     2% - 2.75%   seller

Taxes

Individual Taxation

	Real property gain tax	1ST 5 Years: 30%
		6TH year and subsequent: 5%

Personal Taxation

Types Of Income     Rate (%)     Business, trade or profession   Employment   Dividends   Rents (If earned by non-residents, may be subject to 10% withholding tax) 26 (flat rate)

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, are charged Real Property Gain Tax(RPGT).It is levied on progressive rates and depends on the property’s ownership period and holding period prior to sales.

RPGT rates

Time of Sale     Tax Rate     Disposal within five years after the date of acquisition 30%   Disposal in the sixth year after the date of acquisition or thereafter 5%

Personal Taxation

Assessment Tax: Based on Malaysian government's rent value and on a % of the AV (Maximum: 35% of Annual Value)

Stamp Duty for Property     RM0 - RM100,000 1%   RM100,001 - RM500,000 2%   RM500, 001 and above 3%

No specific tax is levied on property owners. However, individual state governments levy a land tax known as ‘quit rent’ which is payable yearly.

Quit Rent: 1-2 cents per square foot    (rate varies with land category and size.)

Corporate Tax

Income and capital gains earned by companies are subjected to corporate income tax: 25% (Rate falls to 24% with effect from 2016)

Capital gains tax

Ownership Period     Tax Rate     Up to 3years 30%   3-4 years 20%   4-5 years 15%   5 years and above 5%

Others

Carparks are included in purchase price. Payments for developments under construction, are made progressively, based on payment schedule.

Source: OrangeTee.com retrieved 22 Aug 2014