Foreign Property Buyers — Your Stamp Duty Just Doubled!

Introduction

If you are a foreign investor planning to purchase property in Malaysia, it is important to note that stamp duty on residential property transfers will increase from 4% to 8% starting 1 January 2026.

This change, announced in Malaysia’s Budget 2026, applies to non-citizens (excluding Malaysian permanent residents) and foreign-registered companies purchasing residential properties.

Our property lawyers at C K LIM & PARTNERS explain what the new rate means, who will be affected, and how to plan your purchase timeline to avoid unnecessary cost.

What’s Changing

From 1 January 2026, any instrument of transfer for residential property executed by:

• Foreign individuals who are not Malaysian permanent residents; and
• Foreign-registered companies

will be subject to a fixed 8% stamp duty rate, compared to the previous 4%. This applies based on the execution date of the transfer instrument, not the date the Sale and Purchase Agreement (SPA) was signed.

Who Is (and Isn’t) Affected

Affected:
– Non-Malaysian citizens who are not permanent residents

– Foreign-incorporated companies purchasing Malaysian residential property

Not Affected:

– Malaysian citizens

– Malaysian permanent residents

– Commercial or industrial property transfers

Comparison with Malaysian Buyer Rates

Malaysian citizens and permanent residents continue to enjoy tiered rates:
1% on the first RM100,000

2% on the next RM100,000

3% on the next RM800,000

4% on any amount above RM1,000,000

Foreign buyers will instead pay a flat 8% rate on the entire property value or consideration.

Example Calculations

Effective Date and Timing Strategy

The key date is the execution of the transfer instrument, not the SPA date. If you have signed your SPA but the transfer is executed after 1 January 2026, the 8% rate will apply.

Tip: If your transaction is already in progress, complete and stamp your instrument of transfer before 31 December 2025 to remain under the 4% rate.

What Foreign Buyers Should Do Now

• Review and, where possible, complete property transactions before 31 December 2025.
• Budget for additional costs if completion extends into 2026.
• Seek legal advice early to plan state consent, adjudication, and execution timelines.
• Confirm the classification of your property to avoid dispute or reassessment later.

Frequently Asked Questions

1.       Does the 8% stamp duty replace Real Property Gains Tax (RPGT)?
No. Stamp duty is payable when purchasing property, while RPGT applies when selling. They are separate tax regimes.

2.       Are permanent residents affected by this increase?

No. Malaysian permanent residents remain under the existing tiered rates of 1% to 4%.

3.       What if my SPA is signed before 2026 but transfer occurs after?

The higher 8% rate will apply if the instrument of transfer is executed on or after 1 January 2026, regardless of when the SPA was signed.

4.       Does this apply to commercial property?

The proposed change focuses on residential properties only as announced in the Budget.

5.       Can this rate be avoided or reduced?

Execution timing is key. If you execute your transfer before 1 January 2026, the existing 4% rate still applies. Always consult your lawyer before finalising your completion date.

Secure Your Ownership with C K Lim & Partners – Contact Us

At C K Lim & Partners, we specialise in helping Penang property owners complete the property matters efficiently.

 Fast
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Call us: 04-6402013

WhatsApp: 012-5770199

Email: cklimpartners@gmail.com

Disclaimer

This article is for general informational purposes only and does not constitute legal advice. Readers are encouraged to consult a qualified lawyer for personalized guidance tailored to their specific circumstances.