Buying property in Malaysia is never just a dream for a foreigner as the country has a rather foreigner-friendly property buying policy as compared to many other ASEAN countries. For instance, factors such as affordable property prices and cost, reasonable taxation, freehold property available, highly accessible financial assistance, stable capital appreciation growth record and easy market exit are the factors which draws expats to Malaysia.
Besides that, Malaysia is one of a few countries in the world that is free from natural disasters. It offers both a modern city and laid-back small-town lifestyle. It is no wonder that Malaysia has always been one of the world’s top destinations for retirement.
Tempted to know more about buying a property in Malaysia? Here are some must-know and guidelines that you cannot afford to miss.
What are the choices and price thresholds?
Almost all kinds of residential, industrial and commercial properties in the open market that a Malaysian can buy, the foreigner can buy, too, except the following:
- Malay reserved land
- Bumiputera (Native Malay) quota property
- Auction property
- Government’s people housing projects
- Private property that priced at RM600,00 and below (from 2020 onwards for properties in Kuala Lumpur, Labuan and Putrajaya)
Do take note that every state and special economic zones of Malaysia have different property price thresholds for foreign buyers. The price ranges from RM500,000 to RM2 million.
Foreigner property buying threshold for popular states in Malaysia:
|Kuala Lumpur||RM1 million|
|Selangor||• RM2 million for Zone 1 (Petaling, Gombak, Hulu Langat, Sepang and Klang)
• RM2 million for Zone 2 (Kuala Selangor and Kuala Langat)
• RM1 million for Zone 3 (Hulu Selangor and Sabak Bernam)
|Penang||• RM1 million for mainland
• RM2 million for island
|Johor||• No threshold for Medini Iskandar in Iskandar Malaysia
• RM500,000 for Forest City, the Malaysia-China joint venture development
• RM2 million for landed property located in Tanjung Bin, Tanjung Pelepas, Iskandar Puteri, Johor Bahru city centre, Pasir Gudang, Tanjung Piai, Sungai Sekudai and Sungai Tebrau.
• RM1 million threshold for landed residences in the rest of the state
|Melaka||• RM500,000 for strata property
• RM1 million for landed property
|Perak (Ipoh)||RM1 million|
What is the cost?
Just like many other countries, buying a property in Malaysia generally requires a 10% of down payment. What else does one have to account for after paying the down payment?
Here are some costs that you may need to take into your investment budget consideration:
- Legal fees and disbursement for Housing Loan Agreement and Sales and Purchase Agreement
- Stamp duty
- Mortgage insurance
- Home insurance
- Quit rent
- Assessment fees
- Maintenance fees and sinking fund
- Real Property Gain Tax
- Property agent fees
- Home renovations
Stamp duty rate for citizen and foreigner:
|Price Tier||Stamp duty (% of property price)|
|Next RM400,000 (RM100,000 – RM500,000)||2%|
|The following amount up to RM1 million (RM500,000 – RM 1 million)||3%|
|Thereafter (> RM 1 million)||4%|
Real Property Gain Tax for foreigner:
It is a form of capital gains tax that homeowners and businesses have to pay when disposing of their property in Malaysia.
|Disposal year||Foreigner tax rate|
|Less or equal to 3 years||30%|
|Less or equal to 4 years||20%|
|Less or equal to 5 years||15%|
|More than 5 years||10%|
Step by step process to owning a home in Malaysia
The procedure of buying a property in Malaysia as a foreign usually takes two to three months. However, it is a rather straightforward process. Here are the steps:
- Pick and confirm a property choice. Lock down the unit with a small booking fee of usually 2% to 3% of the purchase price
- Prepare the relevant documents to apply for a housing loan such as your income statement and tax files. Different bank may require different documents
- Sign the Housing Loan Agreement
- Sign the Sales and Purchase Agreement
- Get a lawyer to process the stamp agreement and do all the necessary registration
- Start serving your loan
How much housing loan you can get?
How much is your property worth?
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