Malaysia Increases Stamp Duty on Foreign Property Buyers to 8%

The Malaysian government has introduced a major revision to its property taxation framework by increasing the stamp duty on the Memorandum of Transfer (MOT) for foreign buyers from 4% to 8%. The new rate applies to residential property purchases by non-Malaysian citizens and foreign-owned entities, and takes effect from 1 January 2026, based on the implementation timeline announced under the national budget measures. The MOT stamp duty is a tax payable upon the transfer of property ownership and is collected during the execution and adjudication of the transfer instrument, making it a mandatory cost before legal ownership can be fully registered.

Under this revision, the 8% stamp duty is imposed as a flat rate on the full property value for foreign buyers, replacing the previous 4% rate. The increase applies regardless of whether the property is purchased for own stay or investment purposes. Malaysian citizens and permanent residents are not affected by this change and will continue to be subject to the existing tiered stamp duty structure based on property value. In addition, the higher 8% rate generally applies only to residential properties, while commercial and industrial properties are subject to separate stamp duty rules.

The policy adjustment primarily affects foreign individuals, overseas investors, and foreign-controlled companies purchasing residential real estate in Malaysia. Buyers who signed a Sale and Purchase Agreement (SPA) prior to the effective date may still be subject to the higher stamp duty if the Memorandum of Transfer is executed or stamped after the policy comes into force. As a result, transaction timing has become a critical consideration for foreign purchasers planning to complete property transfers.

According to policy analysts, the increase is intended to serve multiple objectives. One key aim is to enhance government revenue through higher tax collection from foreign participation in the property market. At the same time, the measure is designed to moderate speculative foreign demand, particularly in prime urban and lifestyle locations where overseas buying activity has historically been strong. By raising transaction costs for non-citizens, the government seeks to support housing affordability and market stability for local buyers.

From a financial perspective, the impact on foreign buyers is significant. For example, the stamp duty payable on a residential property valued at RM1 million has doubled from RM40,000 to RM80,000. This additional cost may influence purchasing decisions, rental yield calculations, and long-term investment strategies for overseas investors, including participants in residency-linked programmes such as Malaysia My Second Home (MM2H).

Overall, the 8% MOT stamp duty marks one of the most substantial tax changes affecting foreign residential property ownership in Malaysia in recent years. Foreign buyers are advised to factor the higher stamp duty into their total acquisition costs and to seek professional legal and tax advice when planning property transactions under the new framework.