Keen on buying a home in Malaysia? Have you carefully taken the time to plan out your finances in advance? If you’re thinking of settling down in Malaysia, it will benefit you in the long term to understand the financial planning involved in buying a home in Malaysia as a foreigner. Here’s a quick guide.
What is the minimum price to pay to buy a home in Malaysia?
As a federation consisting of 13 states and three federal territories, Malaysia is also divided into two regions: Peninsular Malaysia (11 states) and East Malaysia (Sabah and Sarawak). If you’re thinking of purchasing a property in Malaysia, know that the price you will pay is largely influenced by its location, i.e average prices between the two largest cities such as Kuala Lumpur and Johor Bahru are significantly different.
Generally, foreigners are required to abide by the minimum property purchase value of RM1 million in order to buy a house in Malaysia. Except for certain states such as Sarawak, this rule is enforced almost on all property types in almost every state, subjected to the ruling of the individual state authorities.
Property Tax for Foreigners
In planning your budget, you need to consider the length of time that you intend to hold onto the property. The Malaysian government levies a 4% Stamp Duty for any individual selling a home valued above RM1 million. You also need to consider the Real Property Gains Tax (RPGT) too.
- Stamp Duties
- Properties valued above RM1 million will increase their stamp duty rates from 3% to 4% from 1 January 2019 onwards
| Amount of Stamp Duties | Example of Purchase Value of RM1 Million |
|---|---|
| 1% on first RM100,000 | RM1,000 |
| 2% on next RM400,000 | RM8,000 |
| 3% on subsequent amount | RM15,000 |
| Total | RM24,000 |
- Real Property Gains Tax (RPGT)
- Despite not being a purchasing cost, all individuals including foreign buyers are subjected to RPGT for chargeable gains on any disposal of any property. But the applicable RPGT rates enforced on capital gains arising from the sale of properties will vary for citizens and non-citizens.
- For disposal of properties by foreign buyers, RPGT increases from 5% to 10% in the sixth year onwards. However, you are required to fork out RPGT at 30% of the chargeable gain if you sell the property within the first five years of buying it.
| RPGT (2019) | RPGT (Foreigner) |
|---|---|
| Disposal within 5 years from the date of acquisition of property | 30% |
| Disposal in the 6th year and beyond | 10% |
Property Financing
If you are looking to apply for property financing, local banks offer various loan packages for foreigners. This is a crucial step that you should not overlook to ensure that you are prepared with adequate funds. So, how do you know if you’re eligible for a bank loan? This is dependent on factors such as your credit evaluation, income, age and your repayment capability.
On the other hand, the amount of financing provided by banks will also depend on factors such as the value, size, type and location of the property, but you will still need to pay certain taxes or Stamp Duty. Interestingly, the margin of financing could even be as high as 95% of the property’s value.
Brief Summary of Fees as a Foreign Buyer
Purchasing a property in Malaysia will also involve additional fees that include legal fees, agent’s commission, and more.
- Legal Fees
| Property Value | Rates |
|---|---|
| First RM500,000 | 1% |
| Next RM500,000 | 0.8% |
| Next RM2,000,000 | 0.7% |
| Next RM2,000,000 | 0.6% |
| Next RM2,500,000 | 0.5% |
| Above RM7,500,000 | Up for negotiation, without surpassing 0.5% |
- Real Estate Agent Fee
In addition to being entitled a minimum fee of RM 1,000, agents in Malaysia are permitted to charge up to a maximum of 3% of the property sale price as commission, which covers both buildings and land.
We know that buying a property can be a challenging process. With the help of our mini guide, gaining clarity in buying your home in Malaysia will make navigating a new country less daunting. To learn more, you can browse authentic listings and chat with homeowners directly on the app. Talk to our friendly customer support team by calling us at +60 16-299 1366 now!
Sources: Loanstreet, PWTA, iMoney
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