The National House Buyers Association (HBA) is hoping that the government will reconsider the stamp duty on property transfers by way of love and affection regardless of the value.
Datuk Chang Kim Loong, honorary secretary-general of the HBA told NST Property that the association is disappointed that the suggested incentive of a nominal stamp fee of RM10 for the transfer of real property from parents to their close family or children was not satisfied in the revised Budget 2023 and not made a reality.
According to the previous administration's budget plan, regardless of the property's worth, there will only be a small catchment fee of RM10 for transfers of immediate family property, irrespective of the value.
The new Unity Government's amended budget (announced on Feb 24) proposed stamp duty on the instruments of transfer of property by way of love and affection between parents and children, as well as grandparents and grandchildren be fully exempted but limited to the first RM1 million of the property's value.
The remaining balance of the property's value is subject to ad valorem duty rate and is given 50 per cent remission on the stamp duty imposed.
This stamp duty exemption applies only to the recipients who are Malaysian citizens.
Chang said that many parents who had planned to give their property to their children would be disappointed by this because they would now have to pay a significant fee for the transfer.
"Consider an RM2.5 million house in Bangsar that the father wants to give to his daughter. The first RM1 million of stamp duty will be exempted, but the remaining RM1.5 million would be subjected to a four per cent tax, which comes to RM60,000. Given that the government is offering a 50 per cent discount, he will need to pay RM30,000 for the property transfer.
"In addition to the RM30,000, there are other expenses including legal fees, which depend on the value of the property and must be paid for by the parent or the beneficiary. Transferring ownership of your property to family members legally involves paperwork and several procedures. This is a significant sum of money that could be used much more effectively, especially in these hard circumstances.
"The government is placing the priorities all wrong; we want the children to inherit our properties and keep it within the family. So how do we transfer property within our family without having to pay too much? The point is, we want to preserve the property for our children. On paper, there is a gain but there is no actual gain when the property is passed down to the child," he said.
Chang said that the stamp duty exemption on the property's full value is essential because it would relieve the parents' financial strain of paying stamp duties, which can be used for other purposes.