When the Collector of Stamp Duty assesses stamp duty on a property transfer, the duty is calculated on the higher of either the purchase price or the market value of the property. This is what Item 32(a) of the First Schedule to the Stamp Act 1949 requires. Most buyers accept the Collector's assessment without question. This article explains why that may be a costly mistake.

The market value is determined by JPPH, the government's valuation department, using the comparable method of valuation. This means identifying recent sales of similar properties in the same locality and using those actual transaction prices as the benchmark. The courts have consistently held that actual transaction prices must form the basis of any comparable valuation.

Based on what was revealed in a Court of Appeal case, JPPH might be using two figures when comparing property values. The first is (B), the actual transaction price of the comparable, being the real price on which stamp duty was paid. The second is (N), which appears to be JPPH's own internal opinion of what that comparable is worth. This distinction is not defined in the Stamp Act itself but emerged from evidence given by JPPH's own valuer during court proceedings.

If JPPH uses (N) instead of (B), the Court of Appeal has found this erroneous, describing it as a valuation upon a valuation. Your property is then valued against an internal opinion rather than real market evidence, which can inflate the assessed value and your stamp duty significantly. In one decided case, the corrected market value came in nearly RM6 million lower than JPPH's figure.

I will be sharing a real case on this later.

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