Costs You Need to Consider When Selling Property in Malaysia

You’ve decided it’s the right time to sell your house. That’s great! However, you need to be aware that selling property in Malaysia involves more than just finding a buyer and receiving the profits from the sale.

You want to be ready for hidden and upfront costs before and after the sale. This article will help you understand the expenses involved so you can financially plan in advance to avoid being thrown off by unexpected surprises. It can also help you set a realistic selling price to achieve the profit you want from your property investment.

Agent commission

If you’re engaging a professional real estate agent to help promote and sell your property on the subsale market, be aware that most charge a commission of 2-3% of the final sale price. Here’s an indication of what the commissions could look like.

It's important to keep the agent’s commission in mind when you're crunching numbers. Here's why: First, it helps you set a selling price that not only hits your profit target but also covers the agent's fee. Second, it helps you make an informed decision as to whether you want to hire a real estate agent or if you’ll manage the sale to maximise your profits.

Legal and stamp duty fees

You will need a lawyer to handle the Sales and Purchase Agreement (SPA). Legal fees and stamp duty fees will apply, calculated as a percentage of the sale price as outlined below:

While buyers are usually responsible for legal and stamp duty fees, you may want to consider absorbing or splitting these fees to make your property more appealing, especially if you want to quickly close the sale. For instance, many developers of new properties cover legal fees to attract buyers and facilitate the purchase.

Real Property Gains Tax

When selling property in Malaysia, you will need to pay property tax based on the profit you make. This tax is known as the Real Property Gains Tax (RPGT). The RPGT rate depends on the seller's citizenship, residency status, and ownership period, as follows.

It’s important to note that the RPGT rate is only applicable on profits made after deducting the following allowable expenses from your sales price:

• Legal fees
• Accounting fees
• Surveyor’s fees
• Administrative fees
• Real estate agent commission
• Administrative fees
• Home repairs to maintain the property
• Home renovation to upgrade the property
• Cost of preserving or defending one’s title to a right over an asset
• Cost of advertising to sell the property

If you’re selling a property in Malaysia for the first time, you can also take advantage of a once-in-a-lifetime RPGT exemption. It’s also worth noting that RPGT specifically targets profits from the direct sale of property and doesn’t apply to profits generated through other methods, such as refinancing or rental income.

Renovation & Repairs

Before listing your house, you should address any necessary repairs or updates that could improve its market value and increase its appeal to potential buyers. It’s highly advised to hire a professional home inspector who can properly assess what needs to be repaired.

Here’s an estimate of how much it costs to engage professional home inspectors in Malaysia.

Next, it’s best to get a few quotes from verified contractors to estimate how much you’ll need to save up for renovations and repairs before listing your property.

Conclusion

Selling a property in Malaysia comes with various costs, including agent commissions, legal fees, taxes, and any necessary renovation or repairs. Understanding these expenses in advance is key to ensuring a smoother selling process. By planning your budget properly, you can maximise the profit you get from your property investment.

Discover how our personal loans or home renovation loans can support your journey of selling your investment property.

💡 The information provided above is purely for educational purposes.