Inheriting Property in Malaysia: RPGT & Stamp Duty Case Study | CNB Amanah

Inheritance Case Scenario: Navigating the Financial Realities of an Inherited Home

A major concern for beneficiaries in Malaysia is the cost of putting their name on a deceased parent’s property title. Many ask: “Will I have to pay 30% tax on the house? Can I afford to inherit this asset?” At CNB Amanah, we aim to clear the confusion surrounding inheritance tax and estate administration costs.

While Malaysia is a tax-friendly jurisdiction for heirs, the real financial danger lies in probate delays and a lack of professional estate planning, which can result in mounting legal fees and maintenance costs.

The Case of Wei: The “Tax Scare” That Froze a Legacy

Case Example Scenario:
Wei’s father, Mr. Tan, passed away and left the family home in Damansara to Wei. The house had been purchased 30 years ago for RM200,000 but was now valued at RM1.5 million. Wei was terrified that he would have to pay 30% Real Property Gains Tax (RPGT) on that massive RM1.3 million gain, or thousands in stamp duty just to transfer the title.

Because Wei was paralyzed by this fear, he delayed the probate and administration process for two years. During this time, he couldn’t rent the property or pay the utility bills because the accounts were still in his late father’s name. When Wei finally consulted professional estate planner, he realized his fears were unfounded. Because Mr. Tan had a professional will writing plan, the transfer qualified for complete RPGT exemption and a nominal stamp duty fee.

Understanding RPGT and Stamp Duty for Heirs in Malaysia

If you are inheriting property from a parent, the inheritance law in Malaysia provides several significant tax advantages:

• RPGT Exemption: Under the Real Property Gains Tax Act 1976, the transfer of property from a deceased’s estate to a beneficiary is not treated as a “disposal.” This means the estate pays zero RPGT upon the initial transfer.
• Nominal Stamp Duty: When a property is transferred from a parent’s estate to a child (the beneficiary), the stamp duty for the Memorandum of Transfer (MOT) is typically a nominal fee of only RM10.
• No Inheritance Tax: Unlike some Western countries, Malaysia currently does not impose a tax on the total value of the deceased’s wealth.

The Hidden Costs of Estate Administration

Even though taxes are low, the estate administration process is not free. Costs you should prepare for include:

• Legal Fees: Professional fees for applying for a Grant of Probate or Letters of Administration.
• Valuation Reports: Necessary to determine the market value of the property for the court.
• Court Costs & Maintenance: If the property is stuck in probate delays, you may be responsible for quit rent, assessment, and repairs for a house you cannot yet use or sell.

How CNB Amanah Minimizes Your Inheritance Costs

At CNB Amanah, we focus on efficiency to save your family money. Our secure wealth succession strategies are designed to move your assets from one generation to the next with minimal friction:

• Expedited Probate: By having a professionally drafted will and will custody services, we speed up the court process, saving months of maintenance costs.
• Professional Executor Services: As your corporate executor, we handle the Land Office and LHDN (Tax Office) filings professionally, ensuring you don’t miss out on any legal exemptions.
• Transmission of Title: We manage the entire transmission of title process, from valuation to the final endorsement at the land registry.

Frequently Asked Questions

Is there inheritance tax in Malaysia?

Currently, Malaysia does not impose an inheritance tax on the total value of an estate. You do not pay a percentage of the inheritance value to the government.

Do I have to pay RPGT when inheriting a property?

The transfer of property from a deceased person’s estate to a beneficiary is not considered a ‘disposal’ for RPGT purposes. Therefore, no RPGT is payable during the initial inheritance transfer.

How much is the Stamp Duty for inherited property?

For a transfer from a parent’s estate to a child (the beneficiary), the Stamp Duty (Memorandum of Transfer) is usually a nominal fee of only RM10.

What are the hidden costs of property inheritance?

The real costs often lie in legal fees, valuation reports, and court costs associated with obtaining a Grant of Probate or Letters of Administration, especially if the process is delayed.

For further enquiries or to start your property transmission process, reach out to CNB Amanah via our official contact channels.