What is transfer by love and affection and how does it affects RPGT and Stamp Duty?
Transfer of property by love and affection occurs in the 3 scenario below:
1. Between spouses (wife to husband, or husband to wife)
2. Between parents-children (mother to son/daughter, father to son/daughter, vice versa)
3. Between grandparents-grandchildren (grandmother to grandson/daughter, grandfather to grandson/daughter, vice versa)
For Real Property Gains Tax treatment, the transfer by love and affection is taken as “no gain no loss” transfer. There is no change of status in value. Meaning, the house was RM300k acquired by Parent 20 years ago, when it is given to the Child now, it is still that price, but at a new date (date of transfer).
For Stamp Duty, the transfer by love and affection is nonetheless a “Transfer” hence, it attracts Stamp Duty payable. By Stamp Duty (Exemption) (No. 10) Order 2007, see below article, between spouse is 100% exempted, between Parent-Children is 50% exempted, between grandparent-grandchild there is no exemption. So, the RM500k property upon transfer by Love and Affection, from grandfather to grandson, still requires Stamp Duty payment. The amount of stamp duty is determined by the market value or consideration paid, whichever is higher. In such condition, the market value is used.