Transferring or gifting property to a family member can be as simple as submitting a property transfer form, but there are costs involved – even when the property is given as a gift.
Generally, you can not avoid all of the costs involved so it's unlikely you'll be able to gift a house to a family member or relative for free.
The 2 big fees you may be liable to pay are stamp duty on the market value of your property, and potentially capital gains tax (CGT) if it was an investment property.
What is a property title and why does it cost money to transfer it?
A property title is a legal document that holds all the information about a property. It includes details on who owns the land or has a mortgage on it.
When the owner changes, either through gifting or through selling it, the title needs to be legally updated.
Do you have to pay stamp duty on a gifted property?
You have to pay stamp duty on the market value of your property. Even if no money changes hands, the transfer will be considered to have been done based on the property's market value. The government uses this "true" valuation to determine the stamp duty and CGT costs regardless of the discounted selling price.
When transferring a property to a family member, the Australian Tax Office (ATO) says you need to make an effort to get an actual value to estimate from.
"You should obtain a valuation from a professional valuer, or work out the market value yourself using reasonably objective and supportable data," they say. "This can include the price paid for very similar property that was sold at the same time in the same location."
For some examples:
On a property worth $500,000 transferred in QLD, the stamp duty is around $20,000.
On a property worth $600,000 transferred in WA, the stamp duty is around $32,500.
On a property worth $700,000 transferred in VIC, the stamp duty is around $39,000.
On a property worth $800,000 transferred in NSW, the stamp duty is around $31,000.
If the person receiving the gift of the property has not owned a property before, they may be entitled to a discount or waiver on stamp duty.
What if you're gifting part of a property to someone?
Stamp duty is only payable based on how much of the property is being transferred to another person.
One of our readers reached out and asked, "When selling a1/2 of your property to your child, do they pay stamp duty on the full value of the property, or only on the version they are buying?"
The answer is, you only need to pay stamp duty on the part of the property that is changing ownership. In this scenario, if the parents are gifting half of the property to their child, then that recipient would pay stamp duty based on half of the property's value.
Does anything change depending on the state or territory you live in?
Yes. The law around transferring property titles is Australia-wide, but the rules on stamp duty are different in each state and territory.
There are 2 ways you can transfer a property to a family member: gifting and selling.
Gift
You can give ownership of your property to a family member as a gift. No money changes hands in this scenario, but this requires filling out the necessary paperwork with your state revenue office and title office. Your conveyancer may advise you to organise a deed of gift as well. If the property was an investment and not the seller's primary residence, there will likely be CGT costs as well (more on that below).
Sale
You can sell your property to a family member. You will be liable for stamp duty and it will be calculated based on the property's market value, and not the sale price. For instance, Also, if the property is not the seller's main residence (say, if it was an investment property) then capital gains tax will probably apply as well.
What costs will you pay when transferring property to family?
Below are a few examples of fees and charges that may apply when you are transferring or gifting property within your family:
Costs paid by the original owner
Valuation costs. You might need to have the property value determined by a certified valuer before transferring or gifting your property. This is so you know how much to report that you have gained or lost when filing your income taxes. Independent valuations cost between $300 and $900 depending on where the property is.
Legal fees. You should have a conveyancer or solicitor oversee the property transfer and have them draw up contracts or transfer documents with title details, the value and determined price of the property, as well as personal details for both parties. These legal documents can be used in case the validity of the property transfer is ever questioned.
Capital gains tax (CGT). The CGT cost will depend on the amount of capital gain or capital loss resulting from the CGT event. In the event of a capital gain, your total gain amount will be the difference between your capital proceeds and the cost base of your asset. The actual CGT amount you pay depends on your income, as it's added to your income tax for the applicable year. Read more about CGT when selling in our in-depth guide.
Costs paid by the new owner
Stamp duty. Also referred to as stamp duty land tax, this tax is calculated on the value of the property or land that is being transferred or gifted and is represented as a percentage. Some purchases may be exempt from stamp duty, so check with your state or territory office of revenue. Stamp duty is calculated based on the state or territory you're in.
Legal fees. You should have a conveyancer check over everything before signing, and the fees for this can range from a few hundred dollars up to $1,000.
Vanessa and Adnan own a home in NSW. They sell it to their son Al for $500,000, knowing that its true value is actually $900,000. Al pays them $500,000 and Vanessa and Adnan get a professional property valuer to look at the property. The valuer puts the property's market value at $900,000.
Al's costs therefore are:
Sale price: $500,000
Stamp duty (calculated on $900,000 for first home buyers): $20,200
Vanessa and Adnan have used the house as their primary residence for more than 10 years. Therefore they won't have to pay CGT.
* This is a fictional, but realistic, example.
Can you avoid fees and charges when transferring property?
Not entirely. When you gift your property you are still charged stamp duty, even if you sell the property for a small amount to a family member or friend. As the ATO states, the property is calculated at market value if you:
Receive no money for your property
Receive less than the market value for your property; or,
Do not deal at arm's length with the buyer during the sale event
Dealing at arm's length refers to both parties in the sale acting independently and having no "influence or control over each in connection with the transaction".
You might be able to avoid hefty fees when transferring or gifting properties in some select situations and scenarios where CGT and other charges will not apply. Below are some examples of these situations:
If you acquired the asset before 20 September 1985: This date is when CGT came into effect, so any property or assets that were acquired before this date may be exempt from CGT.
If the property being transferred is your home (main residence): If you have been living at the property and have indicated it as your main place of residence (i.e. the address is on your current driver’s licence and you receive mail there) then you may be exempt from CGT when gifting or selling a property to another.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio
Richard's expertise
Richard has written 553 Finder guides across topics including:
From supply and demand through to location, facilities and planned infrastructure projects, there are plenty of factors that can influence property value.
Hi, my mother bought a house for me to live in. Since she purchased the house I have been making the mortgage payments and renovating the house. I am now in the process of purchasing the house from her at the cost of what is remaining on the home loan that she took out. Will she have to pay gift tax on the house as the valuation is higher than the original purchase cost to her and what i am paying for the house.
Finder
MarcSeptember 25, 2015Finder
Hi Nikster,
thanks for the question.
Generally speaking, property transferred to family or friends as a gift or for less than its market value will be taken as being sold for market value for the purposes of calculating Capital Gains Tax. For more information please contact the ATO or a property tax professional.
I hope this helps,
Marc.
MandanaSeptember 23, 2015
I am moving out the property that I share with my husband over last 12 years. the unit has been paid off and it’s under both name of him and I. I would like to know if I move out, I still am owning the half of the unit or I will lose my share if my ex-husband get married again.
Finder
MarcSeptember 25, 2015Finder
Hi Mandana,
thanks for the question.
Moving out of a property does not, generally speaking, make a person lose ownership of that property, although this will depend on the title of the property. A good option might be to contact a legal representative for more information, or alternatively contact the office of state revenue for your state.
Sorry I couldn’t be of more help,
Marc.
MikeAugust 7, 2015
My mother wants to either add me to the title, or to gift the house entirely to me. It is our main residence, we have both lived there for 9 years, my mother is 93 and wants to protect the house from another family member who may make a claim by contesting her will. Will CGT or stamp duty need to be paid. Thanks
BelindaAugust 10, 2015
Hi Mike,
Thanks for your enquiry.
When transferring or gifting property within the family, capital gains tax (CGT) will be determined by the amount of capital gain or loss resulting from the CGT event. In the event of a capital gain, the amount will be the difference between your capital proceeds and the cost base on your asset.
Stamp duty is calculated on the value of the property and is generally represented as a percentage. You may be exempt from paying stamp duty so it’s best to check with your state office of revenue to see if you can realise this exemption.
Above on this page, you can fill out a form to speak with a property tax specialist if you would like to gain further clarification about the costs involved in adding your name to the title, and you might also be interested to read about the process of changing property ownership.
You should also consider speaking to a conveyancer who will give expert and practical advice on what to do in every step of the process.
Thanks,
Belinda
JenJuly 25, 2015
I’ve lived in my main residence house for 6 years, i’m gonna buy another house with my new partner next year. I’m thinking of keeping the current house & letting my parents live in it. Would the house be treated as investment property even though i’m getting no rental income? Would i pay CGT if i sell that house in for example 10 years later?
JodieJuly 27, 2015
Hi Jen,
Thank you for contacting finder.com.au, a financial comparison website.
We are a website that provides general information and not qualified to offer specific advice, generally speaking, CGT is payable on the sale of any asset that makes a gain or profit. There are exemptions when the property is you main place of residence and as you have lived in the property you may be able to claim partial exemption. Whether the property has been an income producing asset or not (if your parents don’t pay rent) does not have bearing on whether you will have to pay CGT, but it would be best to contact a tax specialist or accountant directly to get specialised advice.
Regards
Jodie
MarkJune 23, 2015
My mum is getting quite old and asked me whether she should put her house in my name now, or wait for it through the Will. Financially she wants to do the best for her kids and save us money. Either way she will continue to live in the house as long as she is able.
I’d love to hear peoples thoughts. Is it financially better to leave all this until it goes through the Will process? (Mum has owned the house for over 50 years, No-one owes money on the house and it has never been used as a business.)
BelindaJune 24, 2015
Hi Mark,
Thanks for your enquiry.
You can fill out the above form to discuss your options with a property tax specialist on this page. You might also be interested to read more about the costs involved when transferring property ownership.
You should also consider speaking to a conveyancer who will give expert and practical advice on matters of property law.
Kind regards,
Belinda
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Valuation costs. You might need to have the property value determined by a certified valuer before transferring or gifting your property. This is so you know how much to report that you have gained or lost when filing your income taxes. Independent valuations cost between $300 and $900 depending on where the property is.
Hi, my mother bought a house for me to live in. Since she purchased the house I have been making the mortgage payments and renovating the house. I am now in the process of purchasing the house from her at the cost of what is remaining on the home loan that she took out. Will she have to pay gift tax on the house as the valuation is higher than the original purchase cost to her and what i am paying for the house.
Hi Nikster,
thanks for the question.
Generally speaking, property transferred to family or friends as a gift or for less than its market value will be taken as being sold for market value for the purposes of calculating Capital Gains Tax. For more information please contact the ATO or a property tax professional.
I hope this helps,
Marc.
I am moving out the property that I share with my husband over last 12 years. the unit has been paid off and it’s under both name of him and I. I would like to know if I move out, I still am owning the half of the unit or I will lose my share if my ex-husband get married again.
Hi Mandana,
thanks for the question.
Moving out of a property does not, generally speaking, make a person lose ownership of that property, although this will depend on the title of the property. A good option might be to contact a legal representative for more information, or alternatively contact the office of state revenue for your state.
Sorry I couldn’t be of more help,
Marc.
My mother wants to either add me to the title, or to gift the house entirely to me. It is our main residence, we have both lived there for 9 years, my mother is 93 and wants to protect the house from another family member who may make a claim by contesting her will. Will CGT or stamp duty need to be paid. Thanks
Hi Mike,
Thanks for your enquiry.
When transferring or gifting property within the family, capital gains tax (CGT) will be determined by the amount of capital gain or loss resulting from the CGT event. In the event of a capital gain, the amount will be the difference between your capital proceeds and the cost base on your asset.
Stamp duty is calculated on the value of the property and is generally represented as a percentage. You may be exempt from paying stamp duty so it’s best to check with your state office of revenue to see if you can realise this exemption.
Above on this page, you can fill out a form to speak with a property tax specialist if you would like to gain further clarification about the costs involved in adding your name to the title, and you might also be interested to read about the process of changing property ownership.
You should also consider speaking to a conveyancer who will give expert and practical advice on what to do in every step of the process.
Thanks,
Belinda
I’ve lived in my main residence house for 6 years, i’m gonna buy another house with my new partner next year. I’m thinking of keeping the current house & letting my parents live in it. Would the house be treated as investment property even though i’m getting no rental income? Would i pay CGT if i sell that house in for example 10 years later?
Hi Jen,
Thank you for contacting finder.com.au, a financial comparison website.
We are a website that provides general information and not qualified to offer specific advice, generally speaking, CGT is payable on the sale of any asset that makes a gain or profit. There are exemptions when the property is you main place of residence and as you have lived in the property you may be able to claim partial exemption. Whether the property has been an income producing asset or not (if your parents don’t pay rent) does not have bearing on whether you will have to pay CGT, but it would be best to contact a tax specialist or accountant directly to get specialised advice.
Regards
Jodie
My mum is getting quite old and asked me whether she should put her house in my name now, or wait for it through the Will. Financially she wants to do the best for her kids and save us money. Either way she will continue to live in the house as long as she is able.
I’d love to hear peoples thoughts. Is it financially better to leave all this until it goes through the Will process? (Mum has owned the house for over 50 years, No-one owes money on the house and it has never been used as a business.)
Hi Mark,
Thanks for your enquiry.
You can fill out the above form to discuss your options with a property tax specialist on this page. You might also be interested to read more about the costs involved when transferring property ownership.
You should also consider speaking to a conveyancer who will give expert and practical advice on matters of property law.
Kind regards,
Belinda