20190420 (Sat) Foreigner acquiring property in Sarawak?

20190420 (Sat)

My friend (Chinese*) whose children are born in Australia and now Australian citizen. Can they inherit his property in Kuching?

This is quite a common scenario in our circle of friends. Many classmates and colleague eventually migrated to Australia or New Zealand for reasons not to be mentioned here. Their children eventually embraced citizenship of another country. However, in their old age, can properties in Malaysia (or specifically in Kuching) – be passed down or inherited as Gift to their children?

Generally, the answer is Yes. Property for example, his own house or apartment (strata) are leasehold or in perpetuity title. They are under the classification of Mixed Zone Land (building) as in Sarawak Land Code. Assuming that they are properties with issued documents of title, the ownership is clean and clear, thus should be allowed for dealing (unless restricted as stated in title).

See another posting on Foreigners investing into Sarawak here.

Changes to the MM2H Program for Sarawak was announced last year in 2020 foreigner are only allowed to acquire properties RM600,000 and above properties in Kuching City Area, and RM500,000 and above for other cities.

This can be acquired by foreigner (his children) as long as it is for Residential purpose – S.13E(2) Sarawak Land Code. It cannot be Agriculture Land or Industrial land. Market Value should be above RM300,000 (which is not a difficult criterion  to fulfil) and approved by State Authority (Majlis Mesyuarat Kerajaan Negeri).

As it is “Gift” so there is no borrowing, therefore the process is easy and straightforward. Stamp duty is to be paid according to Market Value (no 50% exemption as children are not citizen). Real Property Gains Tax is calculated based on “No Gain No Loss”. Valuation is based on year 2000 if acquisition date (when parent acquired the property during younger days) was before 2000.

*If my friend is a native, it is different. Natives of Sarawak can own Native Area Land, Native Customary Land and Interior Area Land. Nevertheless, if his children are no more Malaysian (Sarawakian) citizen or permanent residence of Sarawak, these rights are not attached to them. Thus, a Native Iban’s son who is now an Australian, may NOT qualify to hold Native Area Lands. However, they as foreigners can still inherite strata residential units or residential house above RM300,000, of course, subject to State Authority approval.

Next, we shall talk about foreigner who need borrowing to purchase the property in Sarawak.

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