Assume and A and B jointly holds a property. They intend to transfer the ownership to a sdn bhd comprising of 3 EQUAL shareholders. How do one go about it? Assume the sdn bhd is already set up.

Lets assume that they agree that the selling price is 500k. (BTW, must it be at market price assuming all of them are RELATED parties?)So, A and B will sell to company XYZ for 500k. But company XYZ is a $3 company, how can it buy the 500k property? If company XYZ do not intend to take up any loan, does that mean it will first have to put in 500k into the company as paid up capital??? Another way maybe is to let it remain as rm3 company but the rm500k is a loan from directors. Is that possible? What is the NORMAL way of doing it?

Thanks a lot for answers.

loan will be under company but all directors need to become guarantors.

Hi Pai,

That's not what I asked. Basically, how do people transfer their property to a sdn bhd as a poperty holding vehicle for the family? Do the property have to be transacted at market value? If so, that would be very hard to do because that means one need to have a sdn bhd with huge paid up capital.

To transfer property to sdn bhd, you need to execute SPA indicating the purchase price. Bear in mind, if you buy/sell at lower than market price, your stamp duty is still calculated based on the valuation amount.

Assuming the company need to get loan to buy over the property, all the directors/shareholders have to show repayment capability. The money that you paid as deposit to purchase the property will be regarded as capital in the book of the company.

For example,

3 shareholders: X,Y and Z.
Purchase price: RM500k
Loan Amount: 350K

Minimum paid up capital will be the downpayment for the property; RM150K. This figure will then be apportioned according to the amount contributed by each shareholder.

Thanks Pur-er

What if the property is sold to the company for rm3 only? That is the company issue 3 more shares of rm1 each to buy the property worth rm500k. The company paid up is now rm5. That is the property is being injected into the company for a nominal sum. Possible? How much is the stamp duty? Should be based on market value, but determined by who?

What's your rationale to inject property to company for RM3 only?

Is the property unencumbered or not?

The stamp duty for real estate transfer is determined by Jabatan Penilaian dan Perkhidmatan Harta based on their own valuation.

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Added on October 27, 2009, 12:13 pmBased on value of RM500k, the stamp duty will work out to be RM9k.

Scale:

First RM 100,000 : 1%
RM 100,001 to 500,000 : 2%
RM 500,001 and above : 3%

This post has been edited by pur er: Oct 27 2009, 12:13 PM

constant,

The easiest way is to bring your land title and your sdn bhd documents to a mortgage loan officer of any bank, tell the bank you want to apply a mortgage loan by transferring the ownership of the land to Sdn Bhd.
They will be able to give you a better picture of what you are suppose to do.

The reason being: if transacted at full value, the authorised and paid up capital of the company will be much higher. I understand there is some fees to be paid for high authorised and paid up caps and I am trying to avoid that. BTW, do you know how much need to be paid for paid up capital of, say, rm5mil?

The property is free of encumbrances.

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Added on October 27, 2009, 1:36 pmI am not applying for mortgage loan. Just transfer of assets into holding company.


This post has been edited by constant: Oct 27 2009, 01:36 PM

The RM3 (or RM5?) paid-up S/B can own the property of RM500k.
Consideration for purchase price is via loan from shareholders.
In the books of co, asset of RM 500k is reflected..also shows liability of RM500 owing to shareholders

If u apply for a loan , the bank will usually request that the paid-up capital be increased.
It's up to negotiation, how much of loan to shareholder u want to convert to paid-up capital

This post has been edited by ??!!: Oct 27 2009, 02:29 PM

Since yr property is worth RM500K, then just do a paid up capital for RM500K with lets say authorised RM1Million. Just do whichever way u feel comfortable. Further details you have to discuss with yr secretary and maybe accountant.

What's yr view to transfer the property to a company? Remember to factor into yr consideration abt yr rental income; if you derive any rental from it. This income is taxable.

On top of that, you have to pay annual expenses to maintain yr company eg. annual return, tax return, mthly secretary fee, auditing fee etc.