Q.
Calculate the stamp duty and real property gains tax that need to be paid for the following transactions and explain who are responsible to settle the payment.
a) Mr Hadi purchased a bungalow located at Puncak Alam through public auction at final bidding price of RM400,000 on 1 April, 2008. Market value for similar property as of the date of purchase is RM600,000. On 1 November, 2008, Mr Hadi spent RM150,000 for renovation works. He intended to sell his house. Mr Chin offered him to purchase the house at RM850,000. However, Mr Hadi is not agreeable to Mr Chin's offer and sold the house to Mr Gopal for RM900,000 on 1 March, 2011.
(10 marks)
b) Adi Putra purchased a parcel of agricultural land encompassing an area of one (1) acre on 1 Jun, 2009 at RM100,000. He submitted an application for conversion to change the category of land use to building and paid an additional land premium of RM70,000. Adi Putra obtained planning permission to subdivide his lot into four (4) lots measuring 10,000 square feet each. He sold two (2) lots to his sons Daniel and Darry at a price of RM100,000 each, one (1) to his wife Aminah for love and affection and the other lot to his business partner, Mr Salim for RM250,000. All the transactions were made on 1 February, 2011. Market value for bungalow plot in the vicinity is at RM25,000 per square foot.
16.08.2015 Correction here.
(15 marks)
(25 marks, 2011 Q2)
A.
a) Mr Hadi (correction 05.07.2016 - Thanks to Angie Ng)
Stamp Duty is to be paid based on the First Schedule of the Stamp Act 1949, see earlier post on Stamp Duty 1 here.
The duty is based on the money value of the consideration paid or the market value of the property, whichever is greater.
As Mr Hadi purchased the bungalow via public auction at RM400,000, hence the market value which is greater is used for the calculation of Stamp Duty, ie RM600,000. The rates used is as below:
1% for the first RM100,000
2% for the next RM400,000
3% for the remaining amount
Thus,
RM600,000 = RM100,000 + RM400,000 + RM100,000
= 1% x 100,000 = RM1,000
= 2% x 400,000 = RM8,000
= 3% x 100,000 = RM3,000
Total Stamp Duty to be paid = RM12,000.
For the RPGT during the sale of the bungalow by Mr Hadi to Mr Gopal.
Disposal Price
The consideration received by the disposal of bungalow to Mr Gopal was RM900,000 on 1 Mar, 2011.
The improvement renovation done to the bungalow was RM150,000.
Stamp Duty paid for the transaction in SPA
1% for the first 100,000 = 1,000
2% for the next 400,000 = 8,000
3% for the remaining 400,000 = 12,000
(In law, stamp duty should be paid by purchaser)
Thus, the Disposal Price was:
--- RM900,000 - RM150,000 = RM750,000 (if Stamp Duty was entirely paid by purchaser Mr Gopal in accordance with Stamp Act, 1949)
Acquisition Price
Consideration paid during purchase by Mr Hadi was RM400,000 on 1 Apr, 2008. However, the stamp duty is calculated based on Market Value of RM600,000.
Stamp Duty paid:
1% for first 100,000 = 1,000
2% for the next 400,000 = 8,000
3% f for the remaining 100,000 = 1,000
Total = RM12,000
The Acquisition Price was:
--- RM400,000 + 12,000 = RM412,000 (if stamp duty was entirely paid by Mr Hadi as purchaser in accordance with Stamp Act, 1949)
Gain was:
--- RM750,000 - RM412,000 = RM338,000.
--- RM338,000 - Sch. 4 Exemptions (10% of gain or RM10,000 whichever greater) - RPGT losses before
--- RM338,000 - RM33,800 = RM304,200 (Assuming no RPGT losses before)
Duration of holding = 1 Mar 2011 - 1 Apr 2008 = 2 years 11 months (3rd year).
Mr Hadi has to pay for RPGT gain at rate of 5% as referred to the historical table for RPGT Rates in Malaysia, for the year of disposal - 2011.
--- RM304,200 x 5% = RM15,210.
Mr Gopal has to file to the Inland Revenue Board on the acquisition of the bungalow by completing Form CKHT 2A within 60 days from the date of signing the Sales and Purchase Agreement.
b) Adi Putra
(16.08.2015 Added correction here)
Exemptions for stamp duty, S.80 Stamp Act, 1949 for transaction among close relatives required. (05.07.2016) Thanks to Angie Ng for correction.
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Original Posting Oct, 2014
Deleted.