Gifting a property: Property transfer for FREE through gesture of love and affection

Deed of Gift for the Property 

A deed of gift serves as a legal instrument outlining the transfer of property ownership to another party, wherein the consideration for the conveyance is rooted in sentiments of love and affection. The process of legally transferring property ownership to family members entails thorough paperwork and adherence to specific procedures.

This article aims to elucidate and furnish essential information to facilitate a seamless transfer of property ownership to family members.

Stamp Duty Exemption for Love and Affection Transfer

The Stamp Duty (Exemption) (No. 10) Order 2007 (P.U. (A) 420) grants full exemption of stamp duty on any instrument of transfer of immovable property between spouses.

In the 2023 Budget proposal, it was suggested that all instruments of transfer of property based on love and affection between parents and children, or grandparents and grandchildren, should receive a 100% stamp duty exemption for the first RM1 million of the market value of the immovable property. Any amount exceeding this threshold would be subject to ad valorem stamp duty, with a 50% remission on the duty imposed.

To enact this proposal, the Stamp Duty (Exemption) (No. 3) Order 2023 [P.U.(A) 178] was gazetted on 9 June 2023, and is considered effective from 1 April 2023.

The Order exempts stamp duty for all instruments of transfer involving immovable property as voluntary dispositions inter vivos executed between specified relationships as outlined in the table below.

The exemption will only be applicable if:

(a)   The instrument of transfer is executed on or after 1 April 2023, and

(b)  The recipient is a Malaysian citizen

The outstanding amount of the market value of the immovable property is subject to a stamp duty rate based on ad valorem, as indicated in the provided table.

Real Property Gains Tax (“RPGT”) Exemption for Love and Affection Transfer

RPGT is a tax imposed on the profit gained from the disposal of property, payable by the party selling or giving the property.

Paragraph 12 of Schedule 2 in the RPGT Act 1976 states that when an asset is given as a gift, the disposal is considered at the market value of the asset. However, if the donor and recipient are closely related, such as spouses, parents and children, or grandparents and grandchildren, and the gift is made within five years of the asset’s acquisition, no gain or loss is deemed for the donor and the recipient is considered to have acquired the asset at the same price as the donor’s acquisition price plus permitted expenses. Therefore, no RPGT is payable.

Nevertheless, to qualify for this exemption, the transferor must be a Malaysian citizen and provide proof of birth certificate when submitting RPGT Forms to the Inland Revenue Board (IRB). It is also important to note that transfers between siblings, friends, boyfriends and girlfriends do not qualify for RPGT exemption.

Duration for Love and Affection Transfer

The duration for processing property transfers through love and affection transfers depends on the type and circumstances of the property. It is recommended to consult a lawyer to obtain more specific details based on the characteristics of the property in question.

Disclaimer: This article is for informative and educative purposes only and shall not be relied upon to constitute legal or professional advice. Ng Law Firm shall not hold any form of liability wheresoever and in whatsoever circumstances including but not limited to due to the amendment of legal provisions in the event any person uses the article’s information. Should you need any help and legal advice, you may reach out to Ng Law Firm at +601154304970 or +6046024970. You may also email your enquiry to penang@nglaw.com.my.RPGT is a tax imposed on the profit gained from the disposal of property, payable by the party selling or giving the property.