Malaysia to Double Stamp Duty for Foreign Property Buyers in 2026
Malaysia’s 2026 federal budget, announced on 10 October 2025 by Prime Minister and Finance Minister Dato’ Seri Anwar Ibrahim, proposes a major change for overseas property investors. From 1 January 2026 (subject to legislation), stamp duty on residential property purchases by foreigners would rise to a band of 4–8%
The decision is part of a wider effort to strengthen housing affordability and align Malaysia’s property-tax framework with other developed regional markets. Although it raises the cost of entry for foreign buyers, the reform also reflects the maturity and long-term stability of Malaysia’s investment landscape.
What the 2026 Budget Announced
Under the proposal, non-citizens and foreign-owned companies purchasing residential property would face a banded stamp duty of 4–8% on the instrument of transfer (effective no earlier than 1 January 2026), replacing today’s 4% treatment for foreign buyers. The change applies only to residential properties, not commercial assets, and will take effect for instruments executed on or after 1 January 2026, even if the sale was agreed beforehand.
Malaysian citizens remain on tiered rates between 1% and 4%, while first-time Malaysian buyers continue to enjoy exemptions on homes valued up to RM 500,000 until the end of 2027.
Why the Change Matters
The Ministry of Finance positioned the increase as a way to balance housing access and fiscal responsibility. By adjusting the rate for foreign buyers, the government hopes to ease price pressure in high-demand locations such as Kuala Lumpur, Johor Bahru, and Penang, while also generating additional revenue to support housing and infrastructure projects.
Rather than discouraging overseas investment, the policy is designed to create a more transparent and sustainable environment, one that still welcomes international capital but prioritises local home ownership and market stability.
The Impact on Foreign Buyers
For international investors, the most immediate impact will be financial. Currently, foreign buyers typically spend 2–4% all-in (stamp duty, legal, registration). If the upper 8% rate applies, total acquisition costs could reach 9–10%; if the lower end of the 4–8% band applies, totals would be lower (5–6%).
The timing of the transfer instrument is crucial. Even if a property is reserved or booked before the end of 2025, the higher rate will apply if the official transfer document is signed in the new year. For those looking to invest under current conditions, completing transactions before 1 January 2026 is the clearest way to lock in existing rates.
For a detailed overview of fees, taxes, and buyer requirements, explore our Malaysia Property Toolkit.
Developers’ Response
Malaysia’s development sector has moved quickly to address investor concerns. Several developers, particularly those with projects in Kuala Lumpur’s Golden Triangle and Johor’s Iskandar zone, have already indicated that they may absorb or share part of the higher duty. Others are preparing promotional incentives such as rebates, furnishing packages, and legal-fee coverage to keep international demand strong.
These initiatives suggest the market remains highly receptive to foreign participation and that buyers could see much of the statutory increase offset through tailored incentives or early-purchase programmes.
How Malaysia Compares Regionally
Even at the proposed upper 8%, Malaysia’s entry taxes remain below Singapore, where foreigners pay 60% ABSD. Hong Kong currently applies only ad valorem stamp duty (Scale 2) up to about 4.25% after removing BSD/NRSD in 2024. In Thailand, combined transfer and registration taxes average 2–3%
Malaysia therefore retains a cost advantage versus Singapore, while sitting above Thailand and currently above Hong Kong on transaction taxes; it continues to offer freehold availability, English-language documentation and strong rental yields.
For investors, 2025 represents a very short strategic window to purchase under the current 4% rate before the new duty takes effect.
Market Outlook
Analysts expect a brief adjustment period as investors account for the new costs, followed by continued strength in the premium and branded-residence segments. Core areas such as KLCC, TRX, and Bangsar South continue to attract steady investor demand. Notable developments like CloutHaus KLCC and Core Residence TRX illustrate Kuala Lumpur’s enduring appeal among foreign buyers
Over the longer term, the policy may enhance confidence by reinforcing Malaysia’s reputation for clear governance and regulatory consistency, key factors for long-term value appreciation.
Alestria’s View
At Alestria, we view this policy shift as a recalibration rather than a retreat. Malaysia is moving towards the same professional standards seen in other major property markets, balancing opportunity with responsibility.
For investors, 2025 represents a very short strategic window to purchase under the current 4% rate before the change takes effect. Beyond that, Malaysia will continue to offer a compelling mix of affordability, freehold access, and investment transparency. The willingness of many developers to share or offset part of the increased duty underlines that the country remains firmly open to foreign participation.
2026 Minimum Purchase Thresholds for Foreign Buyers
Kuala Lumpur (Federal Territory)
RM 1 million (£170 000 / USD 210 000)
Johor Bahru (SEZ Zone)
RM 1 – 1.5 million (£170 000 – £255 000 / USD 210 000 – USD 315 000)
Penang
RM 3 million (£510 000 / USD 620 000)
Selangor
RM 2 – 3 million (£340 000 – £510 000 / USD 415 000 – USD 620 000, district dependent)
These thresholds apply per unit and may vary by state. Holders of the Malaysia My Second Home (MM2H) visa or other long-stay passes must still meet the same minimum purchase values.
Key Takeaways
Malaysia’s proposed increase to a 4–8% stamp duty band for foreign buyers marks a turning point in the country’s property-market evolution. It is a step towards a fairer, more structured framework that protects local affordability without closing the door to international investors.
For those considering entry, the remainder of 2025 offers a final opportunity to benefit from the current lower rate before the increased duty begins. With developer incentives emerging and fundamentals still strong, Malaysia remains one of the region’s most promising destinations for global property ownership.minimums.
Related Reading
Luxury Property in Kuala Lumpur: 2026 Market Outlook & Investment Trends
Singapore vs Johor: Which is Better for Property Investment in 2025
Malaysia Stamp Duty 2026: FAQ
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From 1 January 2026 (subject to legislation), Malaysia proposes a 4–8% stamp duty band on the instrument of transfer for foreign buyers, up from today’s 4%.
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No. The higher rate applies only to residential property. Commercial and industrial properties remain subject to existing rates and are not affected by this change.
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The higher rate was announced in Malaysia’s 2026 Federal Budget, presented by Prime Minister Anwar Ibrahim on 10 October 2025. This measure is proposed in Budget 2026 and is not yet enacted.
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No. Malaysian citizens continue to pay 1–4% depending on property value, and first-time buyers remain eligible for stamp duty exemptions on homes up to RM 500,000 until the end of 2027.
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Transactions completed before 1 January 2026 fall under the current 4% rate. The new rate applies if the instrument of transfer is executed on or after that date, even if the sale was agreed earlier.
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Developers across Malaysia, especially in Kuala Lumpur and Johor, have begun introducing incentives such as duty-sharing arrangements, rebates, and legal-fee coverage to help offset the higher stamp duty costs for foreign buyers.
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Even at the upper 8%, Malaysia’s costs are competitive regionally. In Singapore, foreigners pay 60% ABSD; in Hong Kong, buyers pay only ad valorem Scale 2 (max 4.25%) after BSD/NRSD removal; in Thailand, transfer/registration average 2–3%.
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Foreign buyers may also be subject to Real Property Gains Tax (RPGT) when selling. There is no inheritance tax or annual property tax for foreign owners.
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Minimum thresholds vary by state: RM 1 million in Kuala Lumpur, RM 1–1.5 million in Johor, RM 3 million in Penang, and RM 2–3 million in Selangor.
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Yes. Although stamp duty will rise, Malaysia remains one of Southeast Asia’s most accessible markets, offering freehold ownership, transparent legal processes, and strong rental yields in prime locations such as Kuala Lumpur and Johor Bahru.
