Many people have been asking us regarding the ownership transfer of properties among family members, particularly on the stamp duty involved. Thus, we have created this simple guide to shed some light on this matter and answer your queries. Specifically, we will share five typical scenarios of property transfers between family members as enumerated below:
1. Husband fully owns a landed residence and wants to give it all to his beloved wife.
2. Husband and wife co-equally owns a property. The former wants to give his 50 percent share to the latter so that the wife will fully control the property.
3. Father fully owns a house but wants to bequeath it to his only daughter while he is still alive.
4. Husband and wife co-equally owns a property. The latter wants to transfer his 50 percent share to his son, while the husband insists on keeping his full share.
5. A brother plans to transfer a home to his younger sister.
Free Property Transfer Between Family Members
Before we tackle each situation, please note that parents can transfer properties to one another and to their children for zero monetary consideration, meaning for free.
This is done through the use of a Deed of Assignment or Memorandum of Transfer (MOT), and the consideration indicated in the document is “love and affection” (Pindah Milik Tanah Kasih Sayang).
Aside from the aforementioned blood ties, other family members can bequeath a property to another relative for free through a standard MOT. Please bear in mind the consideration of love and affection does not apply to property transfers between siblings or next of kin. It is only valid if it’s the parents performing the transfer to their spouse or children. Also, the MOT or Deed of Assignment still needs to be adjudged and stamped.
Stamp Duty Rate
Property transfers among family members can be done without any price involved. But before the transfer becomes valid, the document still needs to be stamped and you need to pay a stamp duty for that to happen. The tax depends on the value of the property being transferred. For particulars, please see table below:
Stamp Duty Exemption
Nonetheless, stamp duty for some property transfers by way of love and affection is waived. Under the Stamp Duty (Exemption) (No. 10) Order of 2007, there’s no need to pay such tax on property transfers between husband and wife. In comparison, you only need to pay half of the stamp duty for transfers from parents to children and vice versa. For details, please see info below:
It’s important to take advantage of the above exemption as the tax is no trivial sum. For instance, the stamp duty of a home costing RM500,000 amounts to RM9,000, which is already a significant sum for most Malaysian families. Nevertheless, there is no need to pay these transfer fees for transfers between husband and wife.
For property transfers from parents to children or vice versa, you’re only required to fork out half of the stamp duty. For a residence valued at RM500,000, that’s equivalent to RM4,500.
Please keep in mind that the son or daughter who will receive the property must be a legitimate child, stepchild or legally adopted. Moreover, the stamp duty is usually paid by the receiver, unless the parties have a different deal.
Stamp Duty Calculations
Now, let’s discuss the different scenarios of property transfers between family members as enumerated above. But first, let’s assume that the value of the home being transferred across all scenarios is half a million ringgit.
1. Husband fully owns a landed residence and wants to give it all to his beloved wife.
The stamp duty of RM9,000 is fully waived if the home is being transferred by way of love and affection.
2. Husband and wife co-equally owns a property. The former wants to give his 50 percent share to the latter so that the wife will fully own the property.
The stamp duty is RM6,000, which is based on RM250,000, half of the home’s value. Nevertheless, there is no need to pay this amount if the house is being transferred in such a way.
3. Father fully owns a house but wants to bequeath it to his only daughter while he is still alive.
This entails a stamp duty of RM9,000, but you only need to pay RM4,500 as half of the stamp duty has been waived if the property is being transferred by way of love and affection.
4. Husband and wife co-equally owns a property. The latter wants to transfer his 50 percent share to his son, while the former insists on keeping his full share.
The stamp duty is RM6,000, which is based on RM250,000, half of the home’s value. But you only need to fork out RM3,000 as 50 percent of the tax has been waived if the residence is being transferred in this way.
5. A brother plans to transfer a home to his younger sister.
A stamp duty of RM9,000 will be charged in full as property transfers between siblings and among those with lesser blood ties are not exempted from paying the stamp duty.
Conclusion
If you want to save on stamp duty when transferring property among family members the best way to go about it is between spouses, followed by parents to children or vice versa. For transfers involving other kinds of relatives, you will need to pay the full stamp duty. Furthermore, understating the property’s price is a big no-no as government officials can easily check its market value.
For more guides like this, visit the PropSocial discussion page.
(Written by G. Zizan, 24 October 2019)
