The formula for tenancy agreement stamp duty
Breaking down the formula definition:
But before that here’s the official writing from Lembaga Hasil Dalam Negeri (aka the Inland Revenue Board of Malaysia):
Tenant And Landlord
The lease or tenancy instrument which secures annual rent not exceeding RM2,400 is EXEMPTED from duty and presentation of these instruments at a stamping office or centre is not necessary.
The prescribed rate of duty on the instrument which secures annual rent exceeding RM2,400 is as follows:
(For every RM 250 or part thereof in excess of RM2, 400)
When the lease is for a period Duty Rate
Not exceeding one year RM1.00
Exceeding one but not exceeding three years RM2.00
Exceeding three years or for any indefinite period RM4.00
(For every RM250 or part thereof in excess of RM2,400
-If the consideration for tenancy constitutes or includes a PREMIUM, additional duty is chargeable and it is calculated on the amount of the premium at the rate chargeable on immovable property.
If it’s too technical, no worries, here’s a breakdown of the description:
1) The stamping fee is based on your annual rental income so, so your monthly rental x 12.
2) Based on your annual rental income, the first RM2400 is exempted from stamp duty, hence the reduction of RM2400. This will now be your taxable rental income.
3) For every 250 of your taxable annual rental income, a fee will apply based on your lease period.
* Fee of RM1 will apply for 1 year or less
* Fee of RM 2 will apply for after 1 year and 3 years or below
* Fee of RM 4 will apply for after 3 years.
Monthly rental: RM800
Lease period: 2 years = RM 2
Stamp duty for 2 years leasing period and RM 800 rental =[((800 x 12) – 2400) / 250]* x 2 = RM58
* rounding up to nearest ringgit.
If you require stamp duty for extra 1 copy of tenancy agreement:
Stamp duty for 1 copy of agreement= RM 58 + RM 10 = RM 68
Stamp duty for 1 year leasing period and RM 800 rental = [((800 x 12) – 2400) / 250] x 1 = 28.8 = 29 (rounding up)
Stamp duty for extra 1 copy of agreement= RM 29 + RM 10 = RM 39
Stamp duty for 3 years leasing period and RM 800 rental = [((800 x 12) – 2400) / 250] x 4 = 115.2
Rounding RM 115.20 to RM116, and that will be your stamp duty for 1 tenancy agreement.
Stamp duty for extra 1 copy of agreement= RM 116 + RM 10 = RM 126
Stamp duty for 2 copies of agreement= RM 116 + (RM 10 x 2) = RM 136
If it’s too much of a hassle to calculate manually just use the calculator above 🙂
[FAQ] Frequently asked question about Tenancy Agreement
Who prepares the tenancy agreement?
Either the tenant or landlord can engage a lawyer to draft the tenancy agreement. Often many cases property rental agents would be helping landlords prepares the agreement from a prepared template. If you would like to sign the tenancy agreement electronically, Speedrent has a service for it, you may learn more below
Where can I pay for tenancy agreement stamp duty?
You can pay for stamp duty at any Lembaga Hasil Dalam Negeri (LHDN) in Malaysia, for a list of LHDN branches near you, go here.
Who pays for the stamp duty, tenant or landlord?
There is no hard rule on this as the law doesn’t state, however conventionally it is the tenant who will bear the cost of stamping fee.
Alternatively, sign the Tenancy Agreement online with SPEEDMANAGE
By using SPEEDMANAGE , there are several benefits as compared to the conventional way of agreement stamping:
- Sign and pay the Speedsign fee online
- Sign contract within 30 minutes
- Save time and energy
- Agreement stored electronically and view it anytime, anywhere
Conventional agreement stamping:
- Have to visit several places to complete the agreement signing process
- Taking up some time to complete the task
SPEEDMANAGE is legal and the signed digital tenancy agreement and the duty stamped copy will be admissible in court under Section 7 of Electronic Commerce Act 2006 and Section 62(2) of Digital Signature Act 1997.
More information about SPEEDMANAGE
Tenants will be charged RM399 + 6% SST as Speedsign fee.
You should consider your options whether you should use SPEEDMANAGE or conventional way of agreement stamping. SPEEDMANAGE is totally free for landlord to create the agreement. Tenant will pay RM399 + 6% SST as Speedsign fee . The fee is inclusive of stamping fee. So that you don’t have to do the leg work to stamp, and fee calculation. Easy and simple.
For more information about SPEEDMANAGE, you can read it here. Download SPEEDMANAGE and create your agreement immediately at speedmanage.com
Any questions – feel free to email us at [email protected]
*** Currently it is only available for residential units ***