Property transfer (MOT) to family members is a legal process that involves the transfer of property ownership to individuals in the family. This transfer is usually done through the transfer of affection procedure, where there is no financial transaction involved between the giver and the transferee. This process involves the use of a Memorandum of Transfer (MOT) as a sufficient document, and stamp duty will be charged if a Sales and Purchase Agreement (SPA) is used.
Table of Contents
1. Procedure for transferring property to family members (MOT)?
The procedure for transferring property (MOT) to family members involves several steps and required documents. There are two main situations that are discussed: the transfer of ownership of real estate that has been issued an individual title deed and the transfer of ownership of real estate that has not yet been issued an individual title deed.
- Transfer of Real Estate for which Individual Title Deeds have been Issued:
- This procedure involves the use of Form 14A of the National Land Code (Act 828).
- The transfer of any owned land, undivided share in owned land, or lease is done through an instrument in Form 14A.
- Form 14A needs to be signed (certificate) in front of the Registrar/Land Administrator free of charge before proceeding with the procedure.
- Transfer of Real Estate that has not yet been issued with an Individual Title Deed:
- Transfer of ownership (MOT) is usually done through a Deed of Transfer of Rights.
- Deed of Transfer of Rights is a document that contains details of the property, the “history” of the property, and the agreement between the assignee and the beneficiary.
- This letter is signed and witnessed, usually by a lawyer if prepared by the lawyer.
2. Costs involved in transferring property to family members (MOT)
Costing about stamp duty, transfer of love and affection between parents and children; and husband and wife are entitled to exemption from stamp duty.
3. Transferee Exemption Rate
Husband to Wife 100%
Wife to Husband 100%
Parent to Child 100% (limited to RM1 million)
Parents to Children 50%
Budget 2023 stamp duty exemption
From 1 April 2023, property transfers based on love and affection between parents and children as well as grandparents and grandchildren will enjoy a full stamp duty exemption on transfer documents – limited to the first RM1 million of the property’s value.
The remaining balance of the real estate value is subject to the ad valorem stamp duty rate (shown in the table below). However, a remission or discount of 50% will be given on the stamp duty charged. This stamp duty exemption only applies to property recipients who are Malaysian citizens.
PRICE LEVEL STAMP DUTY (% of property price)
First RM100,000 1%
Next 400,000 (RM101,000 – RM500,000) 2%
The following amounts up to RM1 million (RM500,001 – RM 1 million) 3%
After that (> RM 1 million) 4%
For example:
A father who owns a property with a market value of RM1,500,000 wishes to transfer it to his son, will enjoy the exemption of the first RM1 million and will have to calculate stamp duty for the remaining RM500,000.
The amount of stamp duty payable on real estate is:
(RM100,000 X 1%) first + (RM400,000 X 2%)
= RM1,000 + RM8,000
= RM9,000
As for Real Estate Gains Tax (RPGT), it is considered a “no gain no loss” situation for transfers between spouses; parents and children; and grandparents and grandchildren, in accordance with the Real Estate Gains Tax Act 1976.
“Relationships of other family members are all subject to full stamp duty and also RPGT unless they will be transferred after 5 years following the recent change in RPGT,” he said.
The total cost for the transfer will depend on the market value of the property.
4. What happens when the property is still under a mortgage?
The transfer of love and affection (MOT under Love and Affection) through the procedure mentioned above only applies to debt-free properties that are not submitted to the bank as collateral for financing.
If the property is still placed as collateral for a housing loan, the transferee will need to obtain a new loan to settle the existing loan before the transfer is made. Properties that are still vested in the bank cannot be transferred ownership until the bank debt is settled.
The processing period for transferring property to family members depends on the type of property. Properties with leases and encumbrances may take six to seven months, while freehold and unencumbered properties may take three to four months.
Owning a property and being able to pass it on to your loved ones will surely bring you so much joy. However, make sure you know the procedure of how it can be done. Consult with a lawyer if necessary to get a smooth transfer and for you to have peace of mind.