Saturday, 25 April 2015

How To Stamp Tenancy Agreement

I first became a "landlord" and signed my first ever tenancy agreement 2 years ago. Now it's time to renew it.

Last time my property agent helped me to do everything including finding tenant, drafting the agreement and doing the stamping. I think I should learn to do it myself.

For tenancy agreement, we can download it free of charge from internet and just make some necessary amendment.

To know how and where to do the stamping, a search in internet brought me to a good local property investment blog known as "horlic".

However, this blog seems to be inactive now...

Here are steps I went through to get the tenancy agreement stamped.
  1. Prepare 2 copies of tenancy agreement signed by both parties
  2. Download and fill up PDS 1 & PDS 49A forms. Forms are available at LHDN website & branches
  3. Bring the forms and tenancy agreement to nearest LHDN branch. Get a queue number for stamp duty and then submit to stamp duty counter
  4. Wait for your name to be called at payment counter and then pay the stamp duty
  5. Get the tenancy agreement back and go home
*LHDN = Lembaga Hasil Dalam Negeri (Inland Revenue Board)


As there was not many people when I went there, I get everything done in less than 10 minutes.

It's much easier than I thought.

According to the staff there, now we can only stamp the tenancy agreement within 30 days after the starting date of tenancy period.

For example, if you rent your property from 15th April 2015 to 14th April 2017, you can only stamp the agreement from 15th April 2015 to 14th May 2015.

However, I'm not sure how strict they are with this new rule. Previously we can stamp it before the date of tenancy period.





How much stamp duty we have to pay?

LHDN staff will have a list to refer to, but we can calculate the stamp duty by ourselves using a formula. 

To know how much to pay, calculate your annual rental first then refer to the table below.

Annual Rental Tenancy period
< or = 1 year > 1 to 3 years > 3 years
First RM2400 Exempted Exempted Exempted
Every RM250 after RM2400 RM1 RM2 RM4


The first RM2400 of annual rental is exempted from stamp duty. This means that if your monthly rental is not more than RM200, you don't need to pay stamp duty.

It's easier to understand by using example.

If your rental is RM1200 per month and tenancy period is 2 years, annual rental will be RM14400.

As first RM2400 is exempted from stamp duty, only RM12000 will be charged.

So RM12000 divided by RM250 = RM48.

As it is a 2-year agreement, RM48 x RM2 = RM96.

The stamp duty will be RM96. However, we need to pay another RM10 for second copy of agreement.

So, total payable to LHDN will be RM106.

This stamp duty is commonly paid by tenants.

What if the calculated stamp duty is not a round number? 

Lets say if you rent your property at RM1600 per month for 1 year. Stamp duty will be:

[(RM1600 x 12) - 2400] / 250 = RM67.20.

I'm not sure whether it will be rounded up to RM67 or RM68. Those who knows might want to clarify on this.

In conclusion, DIY your tenancy agreement stamping is not difficult at all.


17 comments:

  1. Not so rich to become an owner, cannot DIY also :)

    ReplyDelete
    Replies
    1. You don't need to be rich to be a property investor, as you're using mostly debt. Just need more guts to do make a start.

      Anyway I think you prefer stock market much much more than property investment :)

      Delete
  2. property agents charging around RM500 for tenancy agreement

    ReplyDelete
    Replies
    1. Thanks for the info Uncle Jim. That's a huge sum for me. Better DIY.

      Delete
  3. how if a tenancy agreement for shop?

    ReplyDelete
  4. how if a tenancy agreement for shop?

    ReplyDelete
    Replies
    1. Missed this msg... sorry. Commercial & Residential's rate are similar.

      Delete
  5. Hi. I do not understand how to interpret the table. For every RM250.00 1 year = RM 1; .1 to 3 years = RM2, > 3years = RM4.00. Let say first RM2,400.00 is exempted. So if monthly rental is RM201.00 for 1 year. The calculation I get from your formula is RM 0.048. So I need to pay stamp duty of RM1.00. If the monthly rental if RM250.00 for 1 year, the calculation I get is RM2.4. I need to pay stamp duty of RM3.00. I do not understand what this every RM250.00 after RM2,400.00. Can you please explain more about it?
    Thanks for sharing the knowledge. I find it quite helpful.

    ReplyDelete
    Replies
    1. Thanks. I really don't know how to explain further in words, it's best explained with examples. Lets say if monthly rental is RM2000 for one year contract, annual rental will be RM24,000, after deducting RM2,400 which is exempted from stamp duty, we will get RM21,600. How many RM250 is RM21,600 made up of? It's 21600/250 = 86.4. So stamp duty should be RM86 or RM87.

      Delete
  6. Hi. I have another question. If the monthly rental is RM265.00 for 1 year, so I will get RM3.12. The stamp duty is round up to RM4.00 or equal to RM5.00 according to the table tabulated from LHDN?

    ReplyDelete
    Replies
    1. From calculation using the formula, it should be RM4, but the final stamp duty payable should be referred to LHDN's table. May be they have minimum or round up figures.

      Delete
  7. Hi, if monthly rental is RM1500 for 1 year, so [1500 x 12) - 2400] / 250 = RM63 + 1 extra copies (RM10)= RM73

    But agent mention they will do all agreement and stamping fee with charging RM280..does this is standard rate (since agreement also they are preparing) or can we negotiate the amount?

    Kindly please advise, I am tenant.
    Meanwhile the owner request agent to handle so i as tenant still borne the tenancy agreement & stamping fee?

    ReplyDelete
    Replies
    1. From my calculation the stamping fees should be around RM73 like what you have calculated. Agent might want to charge some service fee, which include preparing the tenancy agreement. You may try to negotiate with your agent to reduce the fee, esp when u already paid them for finding a premise for you. Normally tenant will bear the agreement stamping fees.

      Delete
  8. Hi, once we went to LHDN to pay this tenancy stamp duty, will it means we must report the rental income in our income tax report ?

    Thanks.

    ReplyDelete
    Replies
    1. Actually even without stamping we still need to report rental income in income tax. Once you stamp the agreement, then surely they will know.

      Delete
  9. Hi can I ask that how to calculate my stamping fee if my monthly rental is 1000 for year 1 and 1200 for year 2&3?

    ReplyDelete