Looking for a new place to call home, or perhaps you’re a new homeowner interested in earning some extra income? Renting out your property, even just a room or two, can help ease those monthly payments. You can choose whether you prefer short-term or long-term rentals, depending on your needs.
Whether you’re considering renting as a tenant or landlord, it’s important to be aware that there are currently no legal protections in place. However, you can safeguard your interests by creating a Tenancy Agreement to ensure everything is clearly outlined.
This legal document outlines the rights and obligations of both the landlord and tenant while the tenant occupies the premises. It includes important details such as a description of the rental unit or room, any furniture or fittings provided, and other relevant terms, including utility bills and additional conditions.
Additionally, it’s crucial to be aware of two extra costs associated with the rental process: stamp duty fees and administrative charges for drafting a Tenancy Agreement.
What Is Stamp Duty All About?
Stamp duty is a tax imposed on legal documents in Malaysia, and it applies to various documents, including your Tenancy Agreement, Instrument of Transfer, and Loan Agreements. Generally, the tenant is responsible for paying the stamp duty, not the landlord. It’s important to note that you must have your documents stamped within 30 days of signing, or you could face penalties for late submission.
How Much Is Stamp Duty For Tenancy Agreement?
Instead of a fixed fee, stamp duty for tenancy agreements in Malaysia is calculated based on every RM250 of the annual rental amount. According to the table below, for tenancy periods of less than 1 year, the stamp duty fee is RM1 for every RM250 of the annual rental.
If the tenancy period is between 2 and 3 years, the stamp duty fee is RM3 for every RM250. See the sample calculation below for a clearer breakdown!
DURATION OF TENANCY | AMOUNT |
1 year or less | RM 1 |
> 1 year to 3 years | RM 3 |
> 3 years to 5 years | RM 5 |
> 5 years onwards | RM 7 |
*If you require an additional copy of the tenancy agreement to be stamped, a flat stamping fee of RM10 will apply for each extra copy.
Starting 1 January 2025, the first RM2,400 of your annual rental income is NO LONGER exempt from stamp duty! When calculating the stamp duty fee, you CAN’T subtract RM2,400 from the total annual rental amount to determine the taxable rental income.
How To Calculate Stamp Duty In Malaysia?
Calculating the stamp duty for your tenancy agreement is straightforward. You just need to follow a simple formula, which you can find here:
Step 1
Calculate the total amount of your yearly rental. For instance, if you plan to rent out your unit at RM1,200 per month, your annual rental would amount to RM14,400 (RM1,200 per month x 12 months).
Step 2
The stamp duty will be applied based on the length of the tenancy (refer to the table above). Here, we’ll provide an example for each scenario, using the assumption of renting out your entire unit at RM1,200 per month:
1 year or less |
 *Additional copy of stamped Tenancy Agreement: RM58 + RM10 = RM68 (this total amount is for 2 copies of the Tenancy Agreement, one for the landlord and one for the tenant, both of which need to be stamped by LHDN in order to make it legal and admissible in court.) |
> 1 year to 3 years |
 *Additional copy of stamped Tenancy Agreement: RM173 + RM10 = RM183 (this total amount is for 2 copies of the Tenancy Agreement, one for the landlord and one for the tenant, both of which need to be stamped by LHDN in order to make it legal and admissible in court.) |
> 3 years to 5 years |
 *Additional copy of stamped Tenancy Agreement: RM288 + RM10 = RM298 (this total amount is for 2 copies of the Tenancy Agreement, one for the landlord and one for the tenant, both of which need to be stamped by LHDN in order to make it legal and admissible in court.) |
> 5 years onwards |
 *Additional copy of stamped Tenancy Agreement: RM404 + RM10 = RM414 (this total amount is for 2 copies of the Tenancy Agreement, one for the landlord and one for the tenant, both of which need to be stamped by LHDN in order to make it legal and admissible in court.) |
An important point to remember when calculating the stamping fee is that if the amount you get is NOT a round number (RM x.xx), you must round that figure up to the nearest (and highest).
Feeling confused? Don’t worry! Let’s go through a sample scenario to clarify things. Imagine you want to rent out your room at RM1200 per month for a year:
[(1200 x 12) / 250 x 1] = RM57.6
Since RM57.6 is not a a round number, you must round it up to the nearest (highest), which is RM58. Therefore, your stamping fee would be:
(RM14,400/250) x RM1 = RM58
Stamping the Tenancy Agreement is necessary to make it legally binding and enforceable in court. This process is handled by the Inland Revenue Board of Malaysia (LHDN). The administration charge, on the other hand, covers the fees for the real estate agency or landlord involved in the rental arrangement.
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