Leaving Malaysian Property to a Foreign Beneficiary? They May Need State Consent

If you plan to leave property in Malaysia to a family member who is not a Malaysian citizen, they may not be able to simply inherit it. It is worth checking now, not after you are gone.

Non-citizens need state consent, even through a will

Under the National Land Code, non-citizens and foreign companies need approval from the State Authority to acquire land in Malaysia. That also applies when the property passes through a will or an estate. A valid will decides who should receive the property; state consent decides whether the title can actually be transferred into a non-citizen’s name.

Former Malaysians are included

This is the part that surprises families most. A child who gave up Malaysian citizenship to become, say, Singaporean is now a non-citizen. They still need state consent to inherit their own parents’ home.

The good news on cost

• Stamp duty is nominal. A transfer from the estate to a beneficiary attracts a fixed RM10, not the percentage rates a buyer pays.
• No percentage levy in Johor. Johor has indicated that property transferred through inheritance does not attract its percentage-based levy for foreigners.
• But the consent application still takes time and money: application and administrative fees that can run from a few hundred to a few thousand ringgit, plus legal fees and processing time.

Plan it into your will

It is not a deal-breaker. It is a step, but it needs to be planned into your timeline, not discovered by your executor after you are gone.

1. List each beneficiary’s citizenship today, and update it if anyone changes nationality.
2. Tell your executor that state consent may be needed, so it is budgeted for in time and cost.
3. Give your executor options in the will, for example the power to sell the property and pass on the proceeds if keeping it in the beneficiary’s name is not practical. Your will writer or lawyer can draft this properly.

More on why every Malaysian property should be covered by a will: Why your Malaysian property needs a will. For Singapore owners, see also the truth about “double death tax”.

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Does your will name a non-Malaysian beneficiary? Let’s make sure it is built to handle this, rather than leaving your family to figure it out.

Sources: Toh Liew & Gentry: inheriting property in Malaysia as a foreigner; HHQ: non-citizens and the National Land Code. State practice varies and can change. General information, not legal advice. By Jason Lim (REN 84424, IQI Realty Sdn. Bhd.), licensed will writer.