Assalamualaikum
Miscellaneous Costs To Factor In When Buying A House In Year 2019 | If you are hunting for a dream house, it will be an experience of a lifetime especially for a first-time home buyer as it feels like achievement unlocked in life. However, if survey and research is not properly done, you might overlook some of the total expenditure when acquiring your home. For first-time home buyers, most of the focus is placed on the selling price of the units. Though there are plentiful of freebies and promotions offered by developers, do take note that there are other important costs in home purchasing process that you will need to factor in towards the end of your transaction. Variable third-party fees are often referred as closing costs and if it’s ignored, you may risk financial setbacks and disappointment in realising your dreams of owning a home in Bukit Jelutong.
Here are couple of significant closing costs you will need to include in your property budget planning:
1. Stamp duty
An avoidable cost in property purchasing is stamp duty where it is the tax placed on your property documents during the sale or transfer of the property. This also includes stamp duty on the Sale and Purchase Agreements (SPA) of your property and stamp duty for Memorandum of Transfer (MOT), both of which are calculated based on the purchase price. You will also need to pay the stamp duty on your loan agreement based on flat rate of 0.5% of the total loan.
As we all know in the recent Budget 2019, the government has announced the hike of stamp duty for properties that is costing more than RM1million, where the rate was increased from 3% to 4%. You can click here to see the latest stamp duty rates.
2. Legal fees
Unless if you have a legal background and possess some of the required expertise and knowledge, you are most likely going to engage in some legal assistance for your property purchase. With your appointed solicitor that will prepare all the necessary documents and necessary documents and contracts to facilitate transfer of the properties. With the legal fees for preparation of the SPA, they are calculated as a percentage of the purchase price, varying from 0.25% up to 1% depending on the property value.
3. Real property gain tax (RPGT)
A buyer who has long term planning should look ahead to the possibility that will eventually selling the property in future. For example, you want to leave the neighbourhood, an upgrade of your property, find a better home suited to your preference or selling it for financial purposes due to the booming market. When selling your home to a new buyer, you are still entail to paying real property gain tax (RPGT) if you are profiting from the transaction. Last November, Malaysia’s Budget 2019 was tabled and announced that RPGT rates are to be revised starting next year. Malaysian individuals who are disposing their property in the year 6 of ownership will now have to pay a 5% of RPGT. Meanwhile, whoever dispose their home after less than 3 years will be charged 30% RPGT; 20% in year 4 and 15% in year 5.
4. Agent’s commission fees
During your purchase of new house and you have engage real estate agents especially in the secondary market, agent fees will be an additional cost on top of the price you pay for your own home. Though most buyers are aware of the fees, there are some do not factor in the agent fees in the total cost. It could be a setback when you are on a tight budget. Bear in mind that the maximum fee chargeable on services provided by the agents on the sale of any land and building is normally 1% to 3% with many are on case to case basis. However, as a buyer, you have the rights to bargain and negotiate to confirm your agent fees before engaging the agents to represent you in any property transactions. This move will help you in calculating your costs in advance and to set your budget right.
5. Insurance fees
Buyers are required to purchase insurance on their homes, it is required by most banks as part of the housing loan package to protect the value of property. This type of insurance is commonly referred to as the Mortgage Reducing Term Assurance (MRTA). It’s costs are dependent on the age of the borrower and the total mortgage on property. There are other options besides MRTA like the Mortgage Level Term Assurance (MLTA) which offers repayment of your outstanding home loan as well as a guaranteed cash value back at the end of the scheme.
Here are couple of significant closing costs you will need to include in your property budget planning:
1. Stamp duty
An avoidable cost in property purchasing is stamp duty where it is the tax placed on your property documents during the sale or transfer of the property. This also includes stamp duty on the Sale and Purchase Agreements (SPA) of your property and stamp duty for Memorandum of Transfer (MOT), both of which are calculated based on the purchase price. You will also need to pay the stamp duty on your loan agreement based on flat rate of 0.5% of the total loan.
As we all know in the recent Budget 2019, the government has announced the hike of stamp duty for properties that is costing more than RM1million, where the rate was increased from 3% to 4%. You can click here to see the latest stamp duty rates.
2. Legal fees
Unless if you have a legal background and possess some of the required expertise and knowledge, you are most likely going to engage in some legal assistance for your property purchase. With your appointed solicitor that will prepare all the necessary documents and necessary documents and contracts to facilitate transfer of the properties. With the legal fees for preparation of the SPA, they are calculated as a percentage of the purchase price, varying from 0.25% up to 1% depending on the property value.
3. Real property gain tax (RPGT)
A buyer who has long term planning should look ahead to the possibility that will eventually selling the property in future. For example, you want to leave the neighbourhood, an upgrade of your property, find a better home suited to your preference or selling it for financial purposes due to the booming market. When selling your home to a new buyer, you are still entail to paying real property gain tax (RPGT) if you are profiting from the transaction. Last November, Malaysia’s Budget 2019 was tabled and announced that RPGT rates are to be revised starting next year. Malaysian individuals who are disposing their property in the year 6 of ownership will now have to pay a 5% of RPGT. Meanwhile, whoever dispose their home after less than 3 years will be charged 30% RPGT; 20% in year 4 and 15% in year 5.
4. Agent’s commission fees
During your purchase of new house and you have engage real estate agents especially in the secondary market, agent fees will be an additional cost on top of the price you pay for your own home. Though most buyers are aware of the fees, there are some do not factor in the agent fees in the total cost. It could be a setback when you are on a tight budget. Bear in mind that the maximum fee chargeable on services provided by the agents on the sale of any land and building is normally 1% to 3% with many are on case to case basis. However, as a buyer, you have the rights to bargain and negotiate to confirm your agent fees before engaging the agents to represent you in any property transactions. This move will help you in calculating your costs in advance and to set your budget right.
5. Insurance fees
Buyers are required to purchase insurance on their homes, it is required by most banks as part of the housing loan package to protect the value of property. This type of insurance is commonly referred to as the Mortgage Reducing Term Assurance (MRTA). It’s costs are dependent on the age of the borrower and the total mortgage on property. There are other options besides MRTA like the Mortgage Level Term Assurance (MLTA) which offers repayment of your outstanding home loan as well as a guaranteed cash value back at the end of the scheme.
1 Comments
good sharing eyqa..panduan yang bagus
ReplyDelete