When we think about selling a property, we usually think that we will be getting the entire lump sum from the sale, right? Well, this might come as a surprise to you, but there are several fees and taxes that you will need to pay when you put your property up for sale.
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Property Agent
A property agent will be your best bet if you need help in putting your home up for sale. A property agent will help you set the price of your property and market it, arrange for viewing and bookings, and negotiate with prospective buyers on your behalf. Especially when you are busy with your work or business, a real estate agent can help you to bring prospective buyers to view your house. In return, they earn a commission of typically 2% – 3% of the property’s selling price, which is subject to 6% service tax.
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Cost of Selling the Property on Your Own
If you’re not really into spending thousands of Ringgit on processing fees and property agent’s commissions, you can take the adventurous route of doing it all on your own. But tread this route carefully as you need to do it right to get the best result!
Firstly, you need to establish the value of your house. You can get your property valued by a professional valuation company, though it will incur a cost.
Here is an approximate of the current valuation fees structure in Malaysia:
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Valuation Fees Rate in Malaysia
For the first RM100,000 1/4% Next residue up to RM2 mil 1/5% Next residue up to RM7 mil 1/6% Next residue up to RM15 mil 1/8% Next residue up to RM50 mil 1/10% Next residue up to RM200 mil 1/15% (Source: imoney.my)
So for example, if your house value is at RM500,000, the valuation fees calculation would add up to:
House value: RM500,000
First RM100,000 = RM100,000 x 0.25% = RM250
Residue = RM400,000 x 0.2% = RM800
Total valuation fees = RM250 + RM800 = RM1,050
You are not legally bound to get your property formally valued. The valuation is done so that you can gauge how much your house is really worth, especially by comparing how much other houses in your area are selling or have sold for.
Once the valuation is done, start on the sale advertisement. One of the easiest ways to do this is to put up your ad online, where the bulk of home searches are initiated these days.
Quick solution to get a comparison or value of property can be done by checking out in “guyub.co” for the price of similar property.
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Fix-Ups and Renovation Fees
If you’re thinking about selling your home, it’s likely there are things you would need to do in order to enhance the appeal of your place and potentially raise its value. If you’ve been putting off sprucing up the exterior of your property, painting the inside or repairing a problematic plumbing system, now is the time to make those changes. Any issues with the condition of your home can largely affect the probability of closing the deal, so be sure to fix the glaring problems beforehand. Big repairs can set you back financially, so set aside a budget for this before you decide to sell, especially if you do not want any problems to be revealed during a home inspection.
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Legal Fees
It is recommended to appoint a lawyer to draft, peruse and vet Letter of Offer and the Sales and Purchase Agreement (SPA) after securing a buyer for your property. Your lawyer will also handle all other legal matters associated with the sale.
An example of the legal fees’ calculation is tabulated in the table below:
Price of the Property Rate For the first RM500,000
1% (subject to a minimum fee of RM500.00)
For the next RM500,000
0.8%
For the next RM2,000,000
0.7%
For the next RM2,000,000
0.6%
For the next RM2,500,000
0.5%
Where the consideration or the adjudicated value is in excess of RM7,500,000
Negotiable on the excess (but shall not exceed 0.5% of such excess)
So, if your selling price was RM2,00,000, you will be paying RM16,000 in legal fees:
- The first RM500,000 would be 1%, hence RM5,000.
- The next RM500,000 would be 0.8%, hence RM4,000.
- The remaining RM1,000,000 would be 0.7%, hence RM7,000.
Solicitors Remuneration Order 2005
Other charges or fee :-
1. Attendance to discharge of charge (redemption) or Deed of Receipt and Reassignment – RM300 (to add RM100 if revocation of power of attorney is required)
2. Attendance to preparation and submission for Real Property gain Tax return –
– Form 1A – RM400 (additional RM200 for each additional party)
– Form 502 – RM150
3. Other cost and disbursement that may range from RM500 to RM1,500
4. If the intended sale is subject to first obtaining the consent from the state authority, developer or liquidator, there will also be additional cost that may range from RM50 to RM500. In some cases, the liquidator may charge up to 1% of the selling price as its administrative fee and the liquidator’s lawyer fee of about RM500 -
Real Property Gains Tax (RPGT)
This is a tax that you need to pay to the government upon the sale of your property.
Simply put, the government will be taxing on the profit that you make out of your property sale. But this tax will be exempted should the situation arise where you do not make any profits or you have incurred a loss from the sale.
But how does one calculate RPGT?
- Establish your chargeable gain, which is the difference between the property purchase price and its sale price.
- Multiply this with the rate for your RPGT.
The RPGT would be reduced if your chargeable gain is lower and you take longer than 5 years to sell your property.
Rate of RPGT for Malaysia citizen and permanent resident:
Period of Disposal 1.1.2010 to 31.12.2011 1.1.2012 to 31.12.2012 1.1.2013 to 31.12.2013 From 1.1.2014 Within 2 years 5% 10% 15% 30% Within 3rd year 5% 5% 10% 30% Within 4th year 5% 5% 10% 20% Within 5th year 5% 5% 10% 15% Within 6th year and thereafter Exempted Exempted Exempted 0% Rate of RPGT for Non-Malaysia citizen and Non-permanent resident:
Period of Disposal 1.1.2010 to 31.12.2011 1.1.2012 to 31.12.2012 1.1.2013 to 31.12.2013 From 1.1.2014 Within 2 years 5% 10% 15% 30% Within 3rd year 5% 5% 10% 30% Within 4th year 5% 5% 10% 30% Within 5th year 5% 5% 10% 30% Within 6th year and thereafter Exempted Exempted Exempted 5% Exemption to RPGT may also applies if:
- A once-in-a-lifetime exemption on any chargeable gain from the disposal of a private residence.
- Exemptions on the first RM10,000 or 10% of the profit gained, whichever is higher.
- A property is given as a gift between immediate family members.
Rate of RPGT for Company:
Period of Disposal 1.1.2010 to 31.12.2011 1.1.2012 to 31.12.2012 1.1.2013 to 31.12.2013 From 1.1.2014 Within 2 years 5% 10% 15% 30% Within 3rd year 5% 5% 10% 30% Within 4th year 5% 5% 10% 20% Within 5th year 5% 5% 10% 15% Within 6th year and thereafter Exempted Exempted Exempted 5% Disposal of shares in a Company of a company that comprise of mainly or substantially with real property assets (Real Property Company) is also subject to RPGT.
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Will I Get the Full 10% Deposit After the Buyer Signs the SPA?
No, the purchaser lawyer will retain 3% of the purchase price as the withholding sum for the advance RPGT payment to the Inland Revenue Board (LHDN) to be paid within 60 day from the date of the SPA.
After LHDN is satisfied with the tax return and has established that the RPGT amount is less than the 3%, the balance will be refunded back to you, otherwise you will be asked to pay the 3% of the selling price.
The cost expended in renovating your house, and legal fee and stamp duty paid when you first bought your house may be deductible from the real property gains tax.
From time to time there may be a waiver or remittance of real property gains tax, you can find out from the Inland Revenue Department or by just visiting the LHDN’s website for the latest guidelines and more accurate information on RPGT.
The statement and information in the articles are the opinion of the writer and meant only as a guide. Any property purchase, rental or lease involve many legal issues and other complication depending on the individual facts and circumstances. Readers and Users are strongly advised to seek professional advise including from qualified and competent lawyers, bankers and/or real estate agent to verify the information and the statement before embarking on any purchase, rent or lease of any property. To the fullest extent permitted by law, we exclude and disclaim liability for any losses and damages of whatever nature and howsoever cause and arising including without limitation, any direct, indirect, general, special, punitive, incidental or consequential.
