| Transferor | Transferee | Exemption Rate |
| Husband | Wife | 100% |
| Wife | Husband | 100% |
| Parent | Child | 100 % (limited to RM1 million) |
| Child | Parent | 50% |
We know that owning a property requires us to follow a set of procedures in order to avoid any unforeseen circumstances. It is the same thing when you want to transfer the ownership of your property to a family member. This article will shed some light and provide the necessary information to make the property ownership transfer smoother.
Transferring ownership of your property to family members legally involves paperwork and several procedures. While most of the property transfers are done through purchases, transfers are also done in circumstances such as death, separation, divorce, inheritance, gifting and also when an owner is unable to pay the home loan.
Most property buyers plan to pass on their precious assets to beloved family members, as it is deemed the right choice to make. In order to have a smooth transfer, you should know what needs to be done and most importantly, where to start; how to execute it; and what are the costs involved.
This article will shed some light and provide the necessary information to make the property ownership transfer smoother.
Transfer property to family members
Other than selling your property to someone else, property owners often desire to transfer their properties to someone else, where in most cases it will be for the children, parents, spouses and siblings.
If you want to transfer the ownership of your property to family, you would not need to undergo the conventional transaction as it will be under the “love and affection transfer” (pemberian secara kasih sayang) – which is a term used for property transfer among family members.
Love and affection transfer are for property transfers between spouses, parents and children. Through this transfer, there will be a certain exemption on stamp duty, as long as there is no Sale and Purchase Agreement (SPA) involved.
So, if a father owns a property and wants to transfer his property to one of his children, the transfer can be made without a monetary transaction between the two parties by using a normal Memorandum of Transfer (MOT).
According to Clara Wong, Managing Partner of Clara Wong & Co, there should not be an SPA for love and affection transfer in order to get the stamp duty waiver as according to Stamp Duty (Exemption) (No. 10) Order 2007 and Stamp Duty (Remission) (No. 2) Order 2019.
Wong said that the MOT is sufficient for the transaction, otherwise a full stamp duty will be charged although the relationship between the transferor and transferee is husband and wife or parents and children, or vice versa.
“It will be like a normal subsale transaction if we use SPA. In order to be entitled to a full stamp duty waiver, love and affection transfer shall be by way of MOT without SPA,” she noted.
However, she said, it also depends on whether banks have allowed refinancing, for properties that are still under encumbrances.
“Sometimes certain banks don’t allow it, therefore will have to do by way of SPA and handle it like a normal sub-sale transaction.”
What are the procedures for property transfer to family members?
The process for the transfer will involve the adjudication of Form 14A or Memorandum of Transfer and Deed of Assignment.
You will need to submit the Form 14A of the National Land Code (Act 828) for the transfer of ownership of a property as specified in Section 215, 217 and 218 of the Act.
- (1) The transfer under this Act of any alienated land shall be effected by an instrument in Form 14a.
- (1) The transfer under this Act of any undivided share in alienated land shall be effected by an instrument in Form 14a.
- (1) The transfer under this Act of any lease shall be effected by an instrument in Form 14a.
For the love and affection transfer to materialise, the Form 14A can be signed (attestation) in front of a Registrar/ Land Administrator for free before proceeding with the procedures.
For properties that have not yet been issued an individual title deed, the transfer of ownership is usually done through a deed called the Deed of Assignment – a form of document that contains the details of the property, the “history” of the property and the agreement between both the assignee and the recipient of the rights, which is stated in writing and signed and testified.
If it is prepared by a lawyer, it will be witnessed by the lawyer concerned.
Discover properties for saleThe cost involved to transfer property to family members
As for the stamp duty, Wong said that the love and affection transfers between parents and children; and husband and wife are entitled to a waiver of stamp duty.
Budget 2023 stamp duty exemption
Beginning 1 April 2023, real estate transfers based on love and affection between parents and children as well as grandparents and grandchildren will enjoy full stamp duty exemption on the instruments of transfer – limited to the first RM1 million of the property’s value.
The remaining balance of the property’s value is subject to an ad valorem stamp duty rate (shown in table below). However, a 50% remission or discount will be given on the stamp duty imposed. These stamp duty exemption applies only to property recipients who are Malaysian citizens.
| PRICE TIER | STAMP DUTY (% of property price) |
| First RM100,000 | 1% |
| Next 400,000 (RM101,000 – RM500,000) | 2% |
| The following amount up to RM1 million (RM500,001 – RM 1 million) | 3% |
| Thereafter (> RM 1 million) | 4% |
For example:
A father who owns a property with a market value of RM1,500,000 wants to transfer it to his son, will enjoy an exemption on the first RM1 million and will have to calculate the stamp duty for the remaining RM500,000.
Total stamp duty payable for the property is:
(First RM100,000 X 1%) + (Next RM400,000 X 2%)
= RM1,000 + RM8,000
= RM9,000
As for Real Property Gains Tax (RPGT), Wong added, it is deemed as “no gain no loss” situation for transfers between spouses; parents and children; and grandparents and grandchildren, as according to the Real Property Gains Tax Act 1976.
“Other family members’ relationship are all subjected to full stamp duty and also RPGT unless if to be transferred after 5 years following recent change in RPGT,” she said.
The total costs for the transfer will be depending on the property market value.
What happens when the property is still under a housing loan?
The love and affection transfers through the procedures mentioned above only apply to debt-free properties and those which are not assigned to the bank as collateral to financing.
Wong clarifies that if the property is still under a housing loan, the transferee must obtain a new loan to fully settle the existing loan before transfer can be done.
“It can be done either via refinancing or a new loan application,” she said.
Property that is still vested in the bank cannot be assigned to ownership unless the bank debt has been settled and the bank has reassigned the ownership of the property through a document called the Deed of Receipt and Re Assignment.
How long does it take to transfer property to family members?
The duration for the processing of property transfer through the love and affection transfers depends on the type of property, Joyce Lau Yu Chai, Advocate & Solicitor of Joyce Lau & Partners, noted.
“If it is leasehold and encumbered; or if it is property under the master title and encumbered, it will take around six to seven months,” she said.
While if the property is freehold and holds no restrictions in interest, Lau said it will take around three to four months for properties which are encumbered and three months for those not encumbered.
Having properties and being able to pass them on to your loved ones definitely will be giving you so much joy. However, make sure you know the procedures on how it can be done. Do consult a lawyer if necessary in order to have a smooth transfer and for you to have peace of mind.
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