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.
My husband and I own two investment properties. I own 5% of both and he owns 95% of both. If I transfer my 5% to him do we have to pay stamp duty as though I owned 100% of the properties? I want to do this so I have my own a land tax threshold instead of us sharing one threshold. We want to keep the investments a long time so I am trying to work out if it is worth doing anything.
Finder
RichardApril 7, 2022Finder
Hi Marianne,
The stamp duty payable is calculated based on the value of the property that is being transferred or gifted. That means it will be based on that 5% you own.
Stamp duty may be waived but you need to meet a number of conditions to qualify for this exemption (being partners might be on such case). These exemptions can change from state to state so make sure you request a form from your state office of revenue or your state government website. You can also check out our guide to see the stamp duty exemptions per state or territory.
I hope this helps!
Regards,
Richard
RayMarch 24, 2022
I am currently on a bridging visa (10 years) waiting for an 804 aged parent visa. I am 77 years old and desperately need to down size from 5 beds to 2 bedrooms. Can I gift my house to my son, then get him to buy me a smaller house as it appears that my visa will never be granted.
Finder
RichardMarch 30, 2022Finder
Hi Ray,
In general, you can gift a property to a family member. But your son will have to pay stamp duty on the property’s market value (even if you sell it him for less, or gift it for free).
If the property was your main residence, you can claim the main residence exemption from CGT. This means you can avoid capital gains tax.
If your son wishes to purchase a home for you to live in, that should be possible. If it’s not your son’s residence, then a lender may consider it an investment property.
I hope this helps.
Kind regards,
Richard
AnneMarch 18, 2022
We sold our property to the family company , on paper, no money changed hands, (4 sons) so it could be developed. $2 million value. They had to borrow for the development costs. We will receive our money now development has finished and build a new home. Are we still able to get a part pension or what will Centrelink want from us.
Finder
RichardMarch 23, 2022Finder
Hi Anne,
Your property is not counted as an asset when calculating pension or payment, but it can affect how your pension is assessed under the assets test.
It might be best to seek professional assistance from a property lawyer to get personalised advice into your situation as this is their area of expertise.
Regards,
Richard
JohnMarch 17, 2022
My wife’s parents are wanting to transfer title/gift their home to us. The property does have a small mortgage remaining of about $140-$150K which we are happy to take over the repayments for. Does the fact a mortgage still exists make any difference to what they are wanting to do?
Finder
RichardMay 2, 2022Finder
Hi John,
Transfering the property title to you and your wife will incur stamp duty. Having a mortgage over the property is not a problem but it does mean that the lender will need to be notified (the lender will still be listed on the title deed) and will have to approve the mortgage being transferred to you both.
I hope this helps.
Kind regards,
Richard
PaulMarch 15, 2022
My 2 sisters and myself are joint owners of a beach house used soley for holiday purposes and purchased November 1987.
I have agreed to selling my third to one of my sisters. To minimize CGT can she buy one sixth of the property (half of my share) one financial year and the other one sixth the next financial year?
Finder
RichardMarch 19, 2022Finder
Hi Paul,
Relevant state’s tax laws vary per state. Whether selling the property per portion on different financial years would minimize CGT costs will depend on the location, type, and value of the property.
You should probably talk to an accountant to work out the most tax-effective way to sell your share.
I hope this helps!
Cheers,
Richard
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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.
My husband and I own two investment properties. I own 5% of both and he owns 95% of both. If I transfer my 5% to him do we have to pay stamp duty as though I owned 100% of the properties? I want to do this so I have my own a land tax threshold instead of us sharing one threshold. We want to keep the investments a long time so I am trying to work out if it is worth doing anything.
Hi Marianne,
The stamp duty payable is calculated based on the value of the property that is being transferred or gifted. That means it will be based on that 5% you own.
Stamp duty may be waived but you need to meet a number of conditions to qualify for this exemption (being partners might be on such case). These exemptions can change from state to state so make sure you request a form from your state office of revenue or your state government website. You can also check out our guide to see the stamp duty exemptions per state or territory.
I hope this helps!
Regards,
Richard
I am currently on a bridging visa (10 years) waiting for an 804 aged parent visa. I am 77 years old and desperately need to down size from 5 beds to 2 bedrooms. Can I gift my house to my son, then get him to buy me a smaller house as it appears that my visa will never be granted.
Hi Ray,
In general, you can gift a property to a family member. But your son will have to pay stamp duty on the property’s market value (even if you sell it him for less, or gift it for free).
If the property was your main residence, you can claim the main residence exemption from CGT. This means you can avoid capital gains tax.
If your son wishes to purchase a home for you to live in, that should be possible. If it’s not your son’s residence, then a lender may consider it an investment property.
I hope this helps.
Kind regards,
Richard
We sold our property to the family company , on paper, no money changed hands, (4 sons) so it could be developed. $2 million value. They had to borrow for the development costs. We will receive our money now development has finished and build a new home. Are we still able to get a part pension or what will Centrelink want from us.
Hi Anne,
Your property is not counted as an asset when calculating pension or payment, but it can affect how your pension is assessed under the assets test.
It might be best to seek professional assistance from a property lawyer to get personalised advice into your situation as this is their area of expertise.
Regards,
Richard
My wife’s parents are wanting to transfer title/gift their home to us. The property does have a small mortgage remaining of about $140-$150K which we are happy to take over the repayments for. Does the fact a mortgage still exists make any difference to what they are wanting to do?
Hi John,
Transfering the property title to you and your wife will incur stamp duty. Having a mortgage over the property is not a problem but it does mean that the lender will need to be notified (the lender will still be listed on the title deed) and will have to approve the mortgage being transferred to you both.
I hope this helps.
Kind regards,
Richard
My 2 sisters and myself are joint owners of a beach house used soley for holiday purposes and purchased November 1987.
I have agreed to selling my third to one of my sisters. To minimize CGT can she buy one sixth of the property (half of my share) one financial year and the other one sixth the next financial year?
Hi Paul,
Relevant state’s tax laws vary per state. Whether selling the property per portion on different financial years would minimize CGT costs will depend on the location, type, and value of the property.
You should probably talk to an accountant to work out the most tax-effective way to sell your share.
I hope this helps!
Cheers,
Richard