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.
I’ve been living in the same house for 22 years (it’s in my mothers name) and my mum would like to transfer the house over to me. If we just add my name to the house title instead of transferring it over to my name, do we need to pay CGT and stamp duty?
thank you
Finder
ShirleyMarch 26, 2015Finder
Hi Jo,
Thanks for your question.
It’s likely that stamp duty is payable on the transfer, though CGT is likely not payable as the title is shared, not completely transferred.
Cheers,
Shirley
maxineMarch 18, 2015
Hi there,
My mother would like to put me on the title of an investment property as a joint owner. Will this attract capital gains tax even though she still remains an owner.
Thank you
Finder
ShirleyMarch 18, 2015Finder
Hi Maxine,
Thanks for your question.
This won’t attract capital gains tax, as this only applies when you sell the property. If only title transfers are involved, stamp duty may be liable.
Cheers,
Shirley
CindyMarch 6, 2015
Hi,
i bought a property with my mother in 2006 and we both contributed 50% each. it is still mortgaged. It was initially used and as an investment property and is now main residence to my mother. My parents have recently divorced and my mother is retired. I would like to transfer my 50% to her. She also plans to renovated the unit and then sell to buy a bigger unit. Also i live in the Uk and pay Australian taxes as a non-resident.
1. What is the process and costs? for the transfer?
2. Will i be subjected to CGT once my mum sells the unit?
3. Will she be subjected CGT as well or income as she is retired?
i am trying to work out in what order are the best steps in concluding this arrangement:
1. She pays for the mortgage
2. do i transfer the assets to her
3. Should we sell the unit first?
much appreciated
Cindy
Finder
ShirleyApril 1, 2015Finder
Hi Cindy,
Thanks for your question.
The advice you are seeking for is beyond the scope of this service.
For a more detailed discussion of your circumstances, please consult a property tax specialist.
Cheers,
Shirley
AaronMarch 5, 2015
OK so please answer this for me…
My dad is willing to give me his main residence he has been living in for 25yrs in exchange for the right to live in a granny flat on the property. As outlined in the ‘Granny Flat – Right or Interest’ arrangement
I understand my dad does not have to pay capital gains however do I have to pay stamp duty as the house is not actually a gift but an agreement?
Your response will be greatly appreciated.
Thanks
Finder
ShirleyMarch 5, 2015Finder
Hi Aaron,
Thanks for your question.
This depends on the nature of the agreement and if your father is transferring the property titles into your name. Typically, transferring ownership and titles will mean that you’re liable to pay stamp duty.
You would need to speak to a solicitor to confirm the above. Your solicitor should also draw up a formal agreement to protect all parties.
Cheers,
Shirley
candiceFebruary 17, 2015
I own two title of land one is my principal place of residence and on the other my mother has built a home (her principal place of residence)I wish to gift her the title for her home/land however would this affect her pension? I know that CGT has to be paid on the transfer. Can her name be added to the title along with my husband and my name? Would this result in less CGT?
Thank you
Finder
ShirleyFebruary 17, 2015Finder
Hi Candice,
Thanks for your question.
Your main residence is exempt from the asset test for the age pension but there are some exemptions.
If you add her name into the title along with your husband and your name, CGT won’t be liable because you pay CGT upon the sale or transfer.
If your name remains on the title then no transaction is technically made on your end. However, your mother may be liable to pay stamp duty.
Cheers,
Shirley
ValdiMarch 20, 2015
Hi Shirley
I have bought the house with my mum 2002 back in and about 4 years later i sold my share which was 1/3 to my mum for 1 dollar. Now my mum wants to transfer it in to my name 100% of it. Would i still have to pay the stamp duty or is there a way which i could avoid it?
Thanks for Your help.
Finder
ShirleyMarch 23, 2015Finder
Hi Valdi,
Thanks for your question.
Stamp duty is likely to be payable in this situation. Unfortunately stamp duty is generally exempt in NSW for first home buyers buying an off the plan property, if the property is to be used as your matrimonial home, or because of divorce.
A conveyancer or solicitor would be in a better position to answer this query.
All the best,
Shirley
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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.
I’ve been living in the same house for 22 years (it’s in my mothers name) and my mum would like to transfer the house over to me. If we just add my name to the house title instead of transferring it over to my name, do we need to pay CGT and stamp duty?
thank you
Hi Jo,
Thanks for your question.
It’s likely that stamp duty is payable on the transfer, though CGT is likely not payable as the title is shared, not completely transferred.
Cheers,
Shirley
Hi there,
My mother would like to put me on the title of an investment property as a joint owner. Will this attract capital gains tax even though she still remains an owner.
Thank you
Hi Maxine,
Thanks for your question.
This won’t attract capital gains tax, as this only applies when you sell the property. If only title transfers are involved, stamp duty may be liable.
Cheers,
Shirley
Hi,
i bought a property with my mother in 2006 and we both contributed 50% each. it is still mortgaged. It was initially used and as an investment property and is now main residence to my mother. My parents have recently divorced and my mother is retired. I would like to transfer my 50% to her. She also plans to renovated the unit and then sell to buy a bigger unit. Also i live in the Uk and pay Australian taxes as a non-resident.
1. What is the process and costs? for the transfer?
2. Will i be subjected to CGT once my mum sells the unit?
3. Will she be subjected CGT as well or income as she is retired?
i am trying to work out in what order are the best steps in concluding this arrangement:
1. She pays for the mortgage
2. do i transfer the assets to her
3. Should we sell the unit first?
much appreciated
Cindy
Hi Cindy,
Thanks for your question.
The advice you are seeking for is beyond the scope of this service.
For a more detailed discussion of your circumstances, please consult a property tax specialist.
Cheers,
Shirley
OK so please answer this for me…
My dad is willing to give me his main residence he has been living in for 25yrs in exchange for the right to live in a granny flat on the property. As outlined in the ‘Granny Flat – Right or Interest’ arrangement
I understand my dad does not have to pay capital gains however do I have to pay stamp duty as the house is not actually a gift but an agreement?
Your response will be greatly appreciated.
Thanks
Hi Aaron,
Thanks for your question.
This depends on the nature of the agreement and if your father is transferring the property titles into your name. Typically, transferring ownership and titles will mean that you’re liable to pay stamp duty.
You would need to speak to a solicitor to confirm the above. Your solicitor should also draw up a formal agreement to protect all parties.
Cheers,
Shirley
I own two title of land one is my principal place of residence and on the other my mother has built a home (her principal place of residence)I wish to gift her the title for her home/land however would this affect her pension? I know that CGT has to be paid on the transfer. Can her name be added to the title along with my husband and my name? Would this result in less CGT?
Thank you
Hi Candice,
Thanks for your question.
Your main residence is exempt from the asset test for the age pension but there are some exemptions.
If you add her name into the title along with your husband and your name, CGT won’t be liable because you pay CGT upon the sale or transfer.
If your name remains on the title then no transaction is technically made on your end. However, your mother may be liable to pay stamp duty.
Cheers,
Shirley
Hi Shirley
I have bought the house with my mum 2002 back in and about 4 years later i sold my share which was 1/3 to my mum for 1 dollar. Now my mum wants to transfer it in to my name 100% of it. Would i still have to pay the stamp duty or is there a way which i could avoid it?
Thanks for Your help.
Hi Valdi,
Thanks for your question.
Stamp duty is likely to be payable in this situation. Unfortunately stamp duty is generally exempt in NSW for first home buyers buying an off the plan property, if the property is to be used as your matrimonial home, or because of divorce.
A conveyancer or solicitor would be in a better position to answer this query.
All the best,
Shirley