Budget 2021: Stamp Duty Exemption 2021-2025 And Other Benefits
Budget 2021 under the property segment focuses more on homeownership for first-time house buyers by giving Stamp Duty exemption up to maximum RM9000 and RM2500 stamp duty for transfer and loan agreement instrument.
Finance Minister Tengku Dato’ Sri Zafrul tabled Budget 2021 or the Supply Bill 2021 on Friday, 6th November 2020.
It was an exciting Budget. Exciting enough for me to finish reading the whole speech. (Just kidding! I always do.)
It was presented for the first-time by Perikatan Nasional (PN) and our current Finance Minister, Tengku Dato’ Sri Zafrul, who is not a politician, which is unprecedented.
This year Budget 2021 has a twist.
As we speak, it is debating in the Dewan Rakyat for a few weeks before the members vote to support or reject the Supply Bill 2020 or Budget 2021.
Concerns arise as a specific political bloc has placed conditional support for Budget 2021, which has to be approved to avoid more significant risk to the economy and the country, especially in facing the COVID-19 pandemic.
Political and economic analysts agree that the debated Supply Bill 2021 in the Dewan Rakyat can still be amended by the Government considering all parties’ views, not to mention the debate session itself is to provide the best proposal for Government’s consideration.
As always, every year, I will talk about Budget 2021 covering the Property segment category.
Every year without fail, this year included, the Malaysian Government will always come out with something encouraging for Homeownership.
For most Malaysian, we want to own a house but at a lower price. However, that is not always the case.
Over the years, house prices keep going up, and it put enormous pressure on Malaysians to own a house, especially first-time house buyers.
STAMP DUTY EXEMPTION 2021 FOR FIRST-TIME HOUSE BUYER
That is why, this year. The Government follows the same traditions as before to provide Stamp duty exemption for a first-time house buyer.
As per the Budget 2021 announcement and to further promote homeownership, especially first-time buyers, the Government will implement the following initiatives.
a. Full Stamp Duty exemption on instruments of transfer and loan agreement for first-time homebuyers is extended until 31st December 2025.
The limit of duty stamp for the first residential home is also increased up to RM500,000. This exemption is effective for the Sale And Purchase Agreement executed from 1st January 2021 to 31st December 2025.
Let’s talk about this for a second.
I can’t remember when was the last time; the stamp duty exemption extension was up to five years. Normally, two years and renew as it goes. Anyway, it’s great this way.
STAMP DUTY EXEMPTION 2020 UP TO MAXIMUM RM5000 & RM2500
In the year 2020, the Stamp Duty exemption is up to RM300,000, with property value less than RM500,000.
Meaning, if you’re buying an RM500,000 property and the full stamp duty is RM9,000. You don’t get RM9000 stamp duty exemption.
You will only get RM300,000 stamp duty exemption; in this case, the RM300,000 stamp duty amount is RM5000.
You will still need to top up RM9000-RM5000= RM4000 stamp duty.
This is happening now in the year 2020, but in 2021, the stamp duty exemption is about to change.
STAMP DUTY EXEMPTION 2021 UP TO RM500,000 PROPERTY VALUE
With the new announcement Stamp Duty 2021 exemption, you will get the maximum RM9000 and RM2500 stamp duty exemption for the transfer and loan agreement instrument.
Instead of asking you to top up the RM4000, the Government is giving you a total exemption. You’re not required to pay any top-up. Yay to that!
On that note, I want to highlight a few things.
STAMP DUTY EXEMPTION FREQUENT ASKED QUESTIONS
We often received a question from first-time house buyers regarding stamp duty exemption, and these are a few that keep coming back.
a. If I have a house under my name, but my parents gave it. Can I take advantage of the stamp duty exemption 2021 to buy a new property?
No. If you owned a house, regardless of given by your parents or anyone. You are considering NOT a first-time house buyer. Hence, you can’t entitle to stamp duty exemption 2021.
b. I am a first-time house buyer. I want to buy an auction house. Can I get a stamp duty exemption?
No. To get stamp duty exemption 2021, you must enter an agreement called Sale and Purchase Agreement. Auction property does not have that. If you buy an auction property, you will be entering a different agreement called Proclamation of Sale.
c. I am a first-time house buyer and want to buy a house. The house price is RM500,000. What happens if the property value is RM550,000? Can I still get the stamp duty exemption?
No. The stamp duty exemption is only applicable for property value less than RM500,000.
d. If I am buying a house jointly with my spouse, this is my spouse’s second house, which is first-time for me. Can we entitle to the stamp duty exemption?
Yes. You will entitle to get half of the stamp duty exemption.
Have more questions about stamp duty exemption, reach us here at 012-6946746!
STAMP DUTY EXEMPTION 2021 FOR ABANDONED HOUSING PROJECTS
Back to the Budget 2021, the Government is also giving stamp duty exemption to the following category.
Stamp duty exemption on loan agreements and instruments of transfer given to rescuing contractors and the original house purchaser is extended for another five years.
This exemption is effective for loan agreements and instruments of transfer executed from 1st January 2021 to 31st December 2025 for abandoned housing projects certified by the Ministry of Housing and Local government (KPKT).
This will help revive all the abandoned projects and help thousands of homeowners get their house completed.
OTHER HOUSING PROJECTS
RM500 million ringgit to build 14 thousand low-cost housing units under the Program Perumahan Rakyat.
RM315 million for the construction of 3,000 units of Rumah Mesra Rakyat by Syarikat Perumahan Nasional Berhad.
RM125 million ringgit for the maintenance of low cost and medium-low stratified housing as well as assistance to repair dilapidated houses and those damaged by a natural disaster.
RM310 million for the Malaysian Civil Servants Housing Programme (PPAM).
The Government will collaborate with selected financial institutions to provide a Rent-to-Own Scheme. This program will be implemented until 2022, involving 5,000 PRIMA houses with a total value of more than RM1 billion ringgit and reserved for first-time homebuyers.
The stamp duty exemption was a significant step to encourage first-time house buyers to own a house, especially now when the house prices are low compared to the last few years.
The increase of stamp duty exemption from RM300,000 to RM500,000 is excellent too! A first-time house buyer can apply for a stamp duty exemption up to RM9000 & RM2500 instead of previously RM5000 & RM1500 for the transfer and loan agreement instrument.
Stamp duty exemption on abandoned projects will help thousands of “stuck” homeowners and developers to move forward and completed the projects.
Overall, the Government proposal in Budget 2021 seems to be satisfactory but not outstanding.
As the worsening Covid-19 situation in Malaysia, it would also derail the property sales recovery as the economic outlook becomes uncertain.
I hope the Government can do more to revive the property segment. We are now facing an oversupply of the developer’s completed properties in the sub-sale market, and some of the completed units are left vacant.
This will affect property prices when too many houses are left vacant and unoccupied. If this situation was not tackled, in the future, we might face more significant problems.
Anyway, keep in mind the Budget 2021 still in the debating stage, and hopefully, we will soon hear the outcome.
I hope you like my write-up and take this opportunity to read my other articles.
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