Love and Affection Transfer, a vital process in the realm of property transfers between immediate family members, has recently seen significant revisions in its governing laws. These changes, primarily in stamp duty exemptions, reflect the government’s commitment to facilitating property transfers within families, emphasizing the principles of love and affection.
The Stamp Act 1949, under the new Stamp Duty (Exemption) (No. 3) Order 2023, has introduced changes effective from 1 April 2023. These amendments are not just procedural but are designed to ease the financial burden associated with property transfers within families.
Key Changes in Stamp Duty Exemptions
1.Limited Exemptions: The exemption of stamp duty is now applicable only up to the first one million ringgit (RM1 million) of the property’s value. For values exceeding RM1 million, a fifty percent (50%) exemption is applicable to the remaining amount.
2.Eligibility Criteria: To avail of these exemptions:
a.The transfer instrument must be executed on or after 1 April 2023.
b.The recipient of the property must be a Malaysian citizen.
3.Updated Exemption Rates for Family Transfers:
a.Husband to Wife: 100% exemption, irrespective of property value.No change.
b.Wife to Husband: 100% exemption, irrespective of property value.No change.
c.Parent to Child and Vice Versa: 100% exemption on the first RM1 million, followed by 50% exemption on the excess.
d. Grandparent to Grandchild and Vice Versa: 100% exemption on the first RM1 million, followed by 50% exemption on the excess.
Understanding Stamp Duty in Property Transfers
Before delving into the specifics of Love and Affection Transfer, it’s essential to understand stamp duty, a tax levied on certain legal documents, notably property transfers. Stamp duty in Malaysia operates on a tier-based system:
For the first RM100,000 of the property price, the rate is 1%.
From RM100,001 to RM500,000, the rate increases to 2%.
The portion from RM500,001 to RM1 million is taxed at 3%.
Everything above RM1 million is subjected to a 4% rate.
This tiered approach ensures a progressive tax system, where higher value transactions bear a higher tax rate.
Let’s illustrate the new stamp duty calculations for Love And Affection Transfer with updated examples:
Actual Stamp Duty Calculation:
1% on the first RM100,000 = RM1,000
2% on the next RM400,000 = RM8,000
3% on the next RM500,000 = RM15,000
4% on the remaining RM1,000,000 = RM40,000 Total = RM64,000
Exemption Rate: 100% on the first RM1 million, 50% on the remaining RM1 million
Payable Stamp Duty: Rm40,000-50%=RM20,000
Between Grandparent and Grandchild
Same calculation as above with a payable stamp duty of RM20,000.
On the other hand, between spouses this stamp duty will be exempted.
By understanding and applying these exemptions, individuals can significantly benefit during such transactions, reinforcing the bond of love and affection through financial support and ease. The Malaysian government’s move to update these exemptions demonstrates a commitment to facilitating family unity and financial security, particularly in the context of property transfers.
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