Stamp Duty for Tenancy Agreement Tax Deductible in Malaysia: Everything You Need to Know
As a landlord or tenant in Malaysia, one of the expenses you need to consider is stamp duty for tenancy agreements. This is a tax that the government imposes on the lease of a property, and it is a requirement under the Malaysian Stamp Act 1949.
However, did you know that stamp duty for tenancy agreements is tax-deductible? In this article, we will discuss the details of this tax and how you can save money by claiming it on your taxes.
What is Stamp Duty for Tenancy Agreements?
Stamp duty for tenancy agreements is a tax that the Malaysian government imposes on rental agreements between landlords and tenants. The purpose of this tax is to validate the legal document, making it admissible in court should any disputes arise.
The tax is calculated based on the rental amount and the duration of the lease. The current rates for stamp duty are as follows:
– For leases up to 1 year: RM1 for every RM100 of rent
– For leases between 1 and 3 years: RM2 for every RM100 of rent
– For leases above 3 years: RM3 for every RM100 of rent
For example, if the rental amount is RM1,000 per month and the lease duration is two years, the stamp duty would be RM4,800 (RM2 per RM100 of rent x 24 months x RM1,000).
Is Stamp Duty for Tenancy Agreements Tax-Deductible?
Yes, stamp duty for tenancy agreements is tax-deductible under the Malaysian Income Tax Act 1967. This means that landlords and tenants can claim the amount paid for stamp duty on their taxes and reduce their taxable income.
For landlords, the stamp duty is considered an allowable expense in the calculation of rental income. This means that the amount paid for stamp duty can be deducted from the rental income to reduce the tax payable.
For tenants, the stamp duty is considered a cost of moving and is therefore eligible for tax relief. Tenants can claim the amount paid for stamp duty as a tax deduction under the following category:
– Deduction for expenses incurred in the production of income – Other expenses (EA form)
How to Claim Stamp Duty for Tenancy Agreements on Taxes?
To claim the stamp duty for tenancy agreements on taxes, landlords and tenants need to keep their receipts as proof of payment. The receipts should contain the following information:
– Name and address of the landlord or tenant
– Rental amount and lease duration
– Stamp duty amount paid
– Date of payment
For landlords, the stamp duty can be claimed on the Rental Income Tax Return (Form B) under the allowable expenses section. For tenants, the stamp duty can be claimed on the EA form under the deduction for expenses incurred in the production of income – Other expenses section.
In conclusion, stamp duty for tenancy agreements is a tax that the Malaysian government imposes on rental agreements between landlords and tenants. However, this tax is tax-deductible, which means that landlords and tenants can claim the amount paid for stamp duty on their taxes and reduce their taxable income. It is important to keep receipts as proof of payment and claim the stamp duty on the appropriate tax forms to enjoy the tax relief.
