When it comes to estate planning and property management, there is a common misconception among Malaysian families that transferring a house to a loved one is a simple administrative task.
We often hear clients say:
“It’s just between family members. I am giving it to him for free. Can’t we just fill out a form at the Land Office and change the name?“
The short answer is: No.
In the eyes of the law and the Inland Revenue Board (LHDN), a transfer—even a gift—is still a formal Change of Ownership. It triggers specific legal processes, tax valuations, and banking regulations. If you proceed without understanding the rules of a Deed of Gift Malaysia, you might be shocked by a hefty tax bill or find your application rejected halfway through.
Today, Ann & Ain is here to debunk the three most common myths about transferring property to family members.
Myth 1: “I am giving it for free (RM 0), so I don’t have to pay tax.”
The Reality: The government taxes based on “Market Value,” not your “Love.”
Many parents ask us: “Lawyer, if I state in the contract that the price is RM 0.00, does that mean the Stamp Duty is also zero?”
Unfortunately, this is incorrect. Stamp Duty is calculated based on the current Market Value of the property, not the transaction price between you and your beneficiary.
Even if no money changes hands, the Inland Revenue Board (LHDN) will appoint a government valuer (JPPH) to assess how much the house is worth in the open market today.
- Example: If your house is valued at RM 500,000, the standard Stamp Duty payable would be approximately RM 9,000, regardless of whether you sold it or gifted it.
The Good News:
While you cannot escape the valuation, the Malaysian government does offer Stamp Duty Remission (Excounts) for specific family relationships under a Deed of Gift Malaysia:
- Transfer between Spouses: Usually 100% Exemption (Free).
- Transfer from Parent to Child: Usually 50% Remission (Half Price).
However, please remember: “Discounted” does not mean “Free.” You still need to budget for legal fees, valuation fees, and registration disbursements.
Myth 2: “I am the older brother. Can I get a discount if I transfer to my sister?”
The Reality: Siblings are treated as “Strangers” for tax purposes.
This is perhaps the most painful misunderstanding we encounter. Many clients assume that because they share the same blood and parents, they qualify for the “Love and Affection” tax incentives.
However, under the Malaysian Stamp Act, the definition of a “Transfer based on Natural Love and Affection” is strictly limited. The tax exemptions apply ONLY to:
✅ Husband ⇋ Wife
✅ Parent ⇋ Child (Biological or Legally Adopted)
The exemption does NOT apply to:
❌ Brother ⇋ Sister
❌ Grandparent ⇋ Grandchild
❌ Uncle/Aunt ⇋ Niece/Nephew
If you intend to transfer a property to your sibling, the law treats this transaction exactly the same as selling the house to a stranger. You will be required to pay the full 100% Stamp Duty rate. There are no shortcuts here.
Myth 3: “I am still paying the loan, but I want to change the name now.”
The Reality: The bank owns the title until you pay them off.
This is the biggest operational roadblock in property transfers. Many people believe they can simply change the name on the Title Deed at the Land Office while the father continues to pay the monthly installments to the bank.
This is impossible.
Why? Because your property is “encumbered.” When you took out your housing loan, the bank placed a “Charge” on your Title Deed as security. As long as you owe the bank money, the title deed essentially belongs to them. You do not have the right to gift the property to anyone else without the bank’s permission.
If you want to execute a Deed of Gift Malaysia for a property that is still under a loan, you have only two options:
- Redemption (Cash Settlement): You must use cash to pay off the entire outstanding loan balance. Once the debt is cleared, the bank will perform a “Discharge of Charge,” releasing the title so it can be transferred to your child.
- Refinancing (New Loan): The recipient (e.g., your child) must apply for a new housing loan in their own name. This new loan is used to “buy out” your old loan.
- Warning: This means your child must submit income documents (payslips, EPF) to the bank and pass the credit check (CCRIS/CTOS). If your child does not have an income, the transfer cannot proceed via this method.
Why You Need a Professional Lawyer
A Deed of Gift Malaysia is not a simple form; it is a complex legal procedure involving the Inland Revenue Board (LHDN) for tax adjudication, the Land Office for registration, and potentially a Bank for refinancing.
Trying to navigate this alone often leads to stuck applications and wasted time.
Ann & Ain is here to ensure your transfer is handled correctly from day one. We help you verify:
- Eligibility: Do you qualify for the 50% or 100% Stamp Duty remission?
- Financial Health: Should you use cash redemption or refinancing?
- Budgeting: What is the exact total cost involved?
Don’t Guess. Get the Facts.
Click the link below to tell us about your relationship (e.g., Father to Son) and the estimated value of your property. We will calculate the exact costs for you. Click Here to WhatsApp Ann & Ain for a Deed of Gift Quote.
