It is common for individuals to purchase property jointly, especially with loved ones or family members. Where in such scenario, it is often that one party wishes to transfer his portion of the property to the co-owner or both parties intended to transfer the entire property to their family members without any monetary consideration. In this article, we share about the stamp duty imposed on transfer made between family members by way of love and affection.
Our law provides exemption on stamp duty for transfer of property made by way of love and affection and it only applies to transfer made between spouses, parents and children. If the transferor is transferring his property to his wife, the stamp duty will be fully exempted. Likewise, if the transferor is transferring his property to his child, the stamp duty will be given 50% rebate and the stamp duty will be calculated by the Inland Revenue Board based on the market value of the property at that point of time.
However, under Budget 2023, our Finance Minister proposed full exemption of stamp duty on instruments of transfer of property by way of love and affection between parents and children, and grandparents and grandchildren up to the first RM1 million of the property’s value and 50% of the stamp duty chargeable on an amount in excess of RM1 million shall be imposed on the balance sum, in which it has been gazette on 9.6.2023 and deemed to have come into force on 1.4.2023. (Stamp Duty (Exemption) No. 3 Order-PU.(A) 178/2023)
Transferor | Transferee | Exemption Rate |
Husband | Wife | 100% |
Wife | Husband | 100% |
Father / Mother | Child | 100% (for the first RM1,000,000.00) 50% on the stamp duty chargeable on the remaining sum |
Child | Father / Mother | 100% (for the first RM1,000,000.00) 50% on the stamp duty chargeable on the remaining sum |
Grandfather/ Grandmother | Grandchild | 100% (for the first RM1,000,000.00) 50% on the stamp duty chargeable on the remaining sum |
Grandchild | Grandfather/ Grandmother | 100% (for the first RM1,000,000.00) 50% on the stamp duty chargeable on the remaining sum |
It is essential to note that the exemption only applies if:-
i. it operates as a voluntary disposition inter vivos;
ii. the transferee is a Malaysian citizen; and
iii. the instrument of transfer of the immovable property is executed on or after 1.4.2023 between parents and children and grandparents and grandchildren.
In addition, the child must be a legitimate child, step child or child adopted in accordance with any law.
Apart from the above, any forms of transfer between aunties uncles and nieces nephew, siblings or girlfriends and boyfriends are still subject to full stamp duty.