Hey guys,
This week video, I’m talking about the benefit of transferring the property from a Parent to Children.

Recently, we received lots of questions about this topic.

Some parents wonder should they transfer their existing house to their children now?

As they’re getting older, they want to make sure their children will be the rightful owner of the house.

So in this video, I cover such topic by explaining the benefit of doing the property transfer now.

Here I’m going to do a brief write up about the benefits.

Benefit No. 1: Cost Saving.

When we transfer property in Malaysia, we have to pay stamp duty.
Stamp Duty is calculated based on the property market value.

When property market value is low, the stamp duty is cheaper, when the property value increases the stamp duty will be higher.

That’s just the way it is.

Let’s said; you buy a property now in the year 2019 with the price of RM200,000.
After ten years, do you think your property value will still be at RM200,000?

I guess not.

So, when your property value increase, so do your stamp duty. That’s why it’s always cheaper to do it now.

Another cost of doing the transfer is the legal fees and registration fees.

These two fees might be increased in the future too as you’ll never know when will be the adjustment again.

Always remember the adjustment rarely will reduce; it only keeps increasing.

So, think about it.
Is it cheaper to do it now?

Benefit 2: Stamp Duty Exemption Might Change

Stamp duty is always one of the topics discussed in the yearly Malaysian budget mostly because this is one of the most significant income streams for the government.

For a couple of years, there always a changes in the Stamp Duty, especially for first-time housebuyer stamp duty. It’s a good change for this one.

For transfer between parent and child, it’s called love and affection transfer where a 50% exemption rate can be deduct from the full stamp duty.

But, we will never know how long will the government keeps such exemption.

They might change it, maybe to a better one or maybe to withdraw it.
You’ll never know.

But, do you want to take the chance?

Let think for a second.
Now, you have a 50% exemption rate.
Don’t you want to take it?

Benefit 3: The process will be more straightforward if the parents (owner of the house) is still alive.

I’m going to be blunt with this one.

Every property transaction will be best to be completed when all the parties are still alive and sound to sign the documents, regardless of the parents or children.

If you own the property and reluctant to do a transfer for your children/parent now, then let’s do a WILL, at least.

Ask a lawyer to draft a WILL for you, and then you can clearly state how you want the property to distribute among your children or family.

Then, if you have passed, your children or family need to appoint a lawyer.
The lawyer will request Grant Of Probate (GOP) from the court and once they get it. Then, the property can execute according to the WILL.

The cost of drafting a WILL is not costly. It takes about roughly RM1500++, but still depending on how complicated the WILL.
( If you need further advice on the WILL, please feel free to call us)

okay, the tricky part is when there is No WILL.
Yep, No WILL.

When there is No WILL, your family member needs to appoint a lawyer.
The lawyer will request a Letter of administration from the court.
Once received this, the court-appointed administrator will distribute the property according to the Distribution Act.

In the Distribution Act, it clearly stated how the asset of the deceased distribute.
If that the case, the property might not solely transfer to one name, you might need to share with someone.

So, compare by doing the transfer now or doing a WILL, this will be more uncertain and complicated.

Now, I hope you’ll have a rough idea of the benefit by doing the property transfer to your child or parent.

Okay, so I hope you enjoy the video and article. And I see you soon!

P.S. We have a new article that you might interested to read:

Transfer Property To Family Member

Melissa Lee
Online Mortgage Consultant

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