5 Costs You Must Cover From Selling A House

1. Property Agent Fees
2. Valuation Fees
3. Renovation and Repair Costs
4. Legal Fees
5. Real Property Gains Tax (RPGT)

Selling a house in Malaysia isn't as simple as just getting money for it. There's more to it than meets the eye. You see, beyond the excitement of finding a buyer and closing the deal, there are various costs and considerations that come into play.

These factors not only impact your final profit but also shape the entire selling process. Let's take a closer look at what these costs entail and how they can affect your experience of selling a property in Malaysia.

5 Costs You Must Cover From Selling A House

1. Property Agent Fees: 

When you decide to enlist the help of a property agent to sell your house, you're opting for a smoother and more efficient process. They're experts who handle important tasks like setting the right price, promoting your property to attract buyers, and negotiating deals. It saves you time and stress.

 

 

But, it's not free. Property agents charge a fee, usually 2-3% of the selling price. The maximum they can charge is 3%. For example, if your house sells for RM500,000, the highest fee would be RM15,000.

Even though it sounds like a lot, think about what you get in return. A good agent knows the market and can help you sell faster and for a better price. So, while you're paying for their help, it might end up being worth it because you could make more money in the end.

 

2. Valuation Fees:

Deciding whether to hire a real estate agent or sell your house yourself? Whichever you choose, getting your house valued by a pro is really important to set the right selling price. Valuation fees can vary, usually based on a percentage of your house's value. Here’s how the fees are calculated:

Market Value	Fee
Up to the first RM100,000	0.25%
Next RM2 million	0.20%
Next RM7 million	0.167%
Next RM15 million	0.125%
Next RM50 million	0.10%
Next RM200 million	0.067%
Next RM500 million	0.05%
Amount in excess of RM 500 million	0.04%

 

For example, if your house is worth RM800,000, you might pay around RM1,650 for the valuation.

=(0.25% x RM100,000) + (0.2% x RM700,000)
=RM250 + RM1,400

=RM1,650 (total valuation fees)

It might seem like an extra expense, but having the right price can make a big difference. It could help your house sell faster and for more money.

 

 

Think of it as an investment. Spending a bit now on a good valuation could save you time and maybe even make you more money in the end. So, getting the right price from the start is worth considering.

 

3. Renovation and Repair Costs:

Before putting your property up for sale, doing some small renovations and repairs can make it more attractive to buyers and even increase its value. You don't have to go overboard with spending, but fixing things like cracked tiles or leaky faucets can really make a big difference.

 

 

It's important to plan and budget for these improvements so that you can make sure your property stands out in a competitive market. By taking care of these visible flaws, you're giving your property a better chance of getting noticed and selling for a good price. So, investing a little bit in these fixes upfront could end up paying off in the long run.

 

4. Legal Fees: 

Once you've found someone interested in buying your property, there are some legal things you need to sort out. These are called legal fees. They cover the cost of preparing important paperwork, like the Letter of Offer and the Sale and Purchase Agreement (SPA).

How much you pay in legal fees depends on how much your property sells for. Usually, it's between 0.5% to 1.0% of the selling price. The legal fees, or the cost of hiring a lawyer, are charged based on the property’s selling price as follows:

 

Price of the property	Fee
Up to the first RM500,000	1.0%
Next RM500,000	0.8%
Next RM2,000,000	0.7%
Next RM2,000,000	0.6%
Next RM2,500,000	0.5%

 

For example, if you sell your property for RM2,000,000, you might have to pay about RM16,000 in legal fees:

=(1.0% x RM500,000) + (0.8% x RM500,000) + (0.7% x RM1,000,000)
=RM5,000 + RM4,000 + RM7,000

=RM16,000 (total legal fees)

 

 

Even though it might seem like a lot, having the right legal paperwork is super important for a smooth sale. So, it's worth budgeting for these fees to make sure everything goes well when you're selling your property.

 

5. Real Property Gains Tax (RPGT): 

If you're selling a property in Malaysia, you'll encounter something called Real Property Gains Tax (RPGT). It's a tax you pay on the profit you make from selling your property. How much you pay in RPGT depends on things like how long you've owned the property and whether you're a citizen or not.

 

 

Now, here's the thing, there are some cases where you might not have to pay RPGT. RPGT is only applied on a "no gain, no tax" basis, which means if you sell your property for the same amount or less than what you paid for it, no RPGT is charged.

If you sold a property with no benefit, that will be no tax charged toward vendor(seller). It's No gain no tax basis.

Example: Purchase price as RM620,000.00

After 3 years, you sold at RM620,000.00. In this scenario, there is no tax at all.

Another example: if purchase price as RM620,000.00.

After 5 years you sold at RM650,000.00. You will need to pay 10% of RPGT base on the different sum, mean RM30,000 x 10% = RM3,000 ONLY.

There are exemptions available for certain types of properties and transactions:

• If you’re a Malaysian Citizen or a Permanent Resident:

  • If you sell your property in Malaysia within the first 5 years of owning it, you'll have to pay Real Property Gains Tax (RPGT). The rate you pay can be anywhere from 30% to 15%, depending on how many years you've owned the property.

  • However, there's good news for Malaysian citizens and permanent residents! Starting from January 1, 2022, according to guidelines from LHDN (Lembaga Hasil Dalam Negeri), you won't have to pay any RPGT after the 6th year of owning the property. That means you get to keep all the profit from your property sale without any RPGT to worry about!
     
• If you’re a Foreigner or Non-Citizen:
  • You’ll be charged a 10% RPGT when you sell your property 5 years or more after purchasing it.
    
    
• If you’re a Company:
  
  
  

RPGT Rates	Individuals – Malaysian Citizens & PRs	Individuals – Non- Citizens & Foreigners	Companies
Disposal in 1st to 3rd   year	30%	30%	30%
Disposal in 4th year	20%	30%	20%
Disposal in 5th year	15%	30%	15%
Disposal in 6th year   and beyond	0% (Reduced from 5%)	10%	10%

 

Understanding how RPGT works and if you qualify for any exemptions is really important for planning your finances when selling a property. So, take the time to learn about it to make sure you're not caught off guard by any unexpected taxes.

 

Selling a property in Malaysia involves more than just finding a buyer. There are various costs to think about, and being financially ready is crucial. By understanding and planning for these expenses in advance, you can make the selling process smoother and get the most out of your sale.

Don't forget to get advice from professionals to make sure you're following all the rules and making smart decisions. With careful planning and the right strategy, you can have a successful property sale in Malaysia.

 

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