How To Save Money on Property Transfer Before a Divorce in Malaysia
Quick Summary
If you and your spouse are divorcing and plan to transfer property to each other, do it before filing for divorce. You may qualify for a stamp duty exemption under the love and affection category which can save you money. You need to apply to Inland Revenue Board of Malaysia (LHDN), and approval is not guaranteed.
Divorce and Transfer of Property
Both you and your spouse have agreed to get a divorce in Malaysia. The divorce is mutual, and both of you have come to an agreement on all the divorce terms, including the transfer of properties from one to the other after the divorce.
However, you may think that the cost of transferring properties, including the legal fees and applicable stamp duty, will be high.
Can You Save on Property Transfer Costs During a Divorce?
You may be wondering if there is any way to save costs for property transfer in Malaysia during the course of a divorce.
So, is there a way to save on these costs? Yes, it is possible.
Transfer the Property Before Filing for Divorce
If you intend to get a divorce in Malaysia and both parties agree to transfer any real estate properties (specifically matrimonial assets) between each other, both parties are advised to transfer the properties prior to the divorce in order to save costs.
So how can you save costs?
How the Stamp Duty Exemption Works
Essentially, you may apply for an exemption from stamp duty applicable for property transfers in Malaysia if you are qualified to do so. This exemption from stamp duty for property transfers in Malaysia is given for transfers done under love and affection between legally married husband/wife or parents/children in Malaysia.
Important Conditions to Keep in Mind
It is important to note that there shall be no exemption applicable if the property is sold for money to any other person in good faith, as the exemption is only applicable if it can be demonstrated to be a gift based on love and affection.
Also, it is essential to note that this exemption must be applied to the relevant authority, specifically to the Inland Revenue Board of Malaysia (LHDN), and is subject to the approval of the said authority.
In short, if you are contemplating to get a divorce and both of you have agreed to transfer any matrimonial property between each other, it is best done before filing the divorce petition to save your money specifically on the stamp duty payable.
Key Takeaways
- Transfer the property before you file for divorce. This keeps you eligible for the stamp duty exemption and saves you money.
- The love and affection exemption only applies to transfers between legally married spouses. It does not apply if you are selling the property or transferring it to someone else.
- You still need to apply to LHDN and approval is not guaranteed. Speak to a lawyer first before you make any moves.
Disclaimer
This article discusses potential exemption from stamp duty in Malaysia. While the information provided is based on current laws and regulations, please be aware that the granting of stamp duty exemptions is ultimately at the discretion of the Inland Revenue Board of Malaysia (LHDN). LHDN will consider the specific circumstances of each transaction when determining whether an exemption applies.
You are advised to speak to a qualified lawyer in Malaysia to discuss your situation for a better understanding before you take any action. You may get more information from our lawyer based on your current circumstances in order for our lawyer to advice you accordingly.
