Tenancy Agreement Stamping with LHDN: Everything You Need to Know

Renting a property is an important decision that requires several legal procedures to be followed. One of those procedures is the stamping of the tenancy agreement. In Malaysia, this process is overseen by the Inland Revenue Board of Malaysia, also known as Lembaga Hasil Dalam Negeri (LHDN). This article will provide a comprehensive guide on tenancy agreement stamping with LHDN.

What is LHDN?

LHDN is the tax agency in Malaysia responsible for collecting and enforcing tax laws. It is also responsible for legalizing tenancy agreements by stamping them. The stamping of a tenancy agreement is an official procedure that is meant to ensure that the agreement is legally binding and enforceable in court.

What is a Tenancy Agreement?

A tenancy agreement is a legally binding document that outlines the terms and conditions of a rental property. It is a contract between a landlord and a tenant, and it specifies the details of the tenancy, such as rent, lease term, rights, and obligations of both parties.

Why is Tenancy Agreement Stamping with LHDN Important?

Stamping a tenancy agreement with LHDN is important for several reasons:

1. Legal validity: The stamping of a tenancy agreement with LHDN makes it a legally binding document. This means that if there is a dispute between the landlord and the tenant, the agreement can be used in court as evidence of the terms and conditions of the tenancy.

2. Protection: Stamping a tenancy agreement also provides protection for both parties. It ensures that the rights and obligations of both the landlord and the tenant are clearly stated in the agreement, and both parties have a clear understanding of what is expected of them.

3. Tax compliance: Stamping a tenancy agreement with LHDN is also a legal requirement in Malaysia. Failure to stamp the agreement can result in penalties and fines.

What are the Steps Involved in Tenancy Agreement Stamping with LHDN?

The process of tenancy agreement stamping with LHDN involves the following steps:

1. Prepare the agreement: The landlord and the tenant must first draft the tenancy agreement and ensure that it complies with the legal requirements of LHDN.

2. Payment of stamp duty: The landlord is responsible for paying the stamp duty for the agreement. The amount of stamp duty is calculated based on the monthly rent and the duration of the lease.

3. Submission of the agreement: The stamped tenancy agreement must be submitted to the nearest LHDN office. It is advisable to make a few photocopies of the agreement for safekeeping.

4. Collection of the agreement: The stamped tenancy agreement can be collected from the LHDN office after a few days. The document must be signed by both the landlord and the tenant.

What Are the Consequences of Not Stamping a Tenancy Agreement?

Failure to stamp a tenancy agreement can result in the following consequences:

1. Invalidity: An unstamped tenancy agreement is considered invalid, and it cannot be used as evidence in court.

2. Penalties and fines: Failing to stamp a tenancy agreement can result in fines and penalties directed towards both the landlord and the tenant.

Conclusion

The stamping of a tenancy agreement with LHDN is an important procedure that should not be overlooked. It ensures that the agreement is legally binding and enforceable in court, provides protection for both parties, and ensures tax compliance. Failure to stamp a tenancy agreement can have serious consequences, so it is advisable to follow the legal procedure diligently.