Learn how tax and charges work when gifting or selling property to family
The current market hasn’t been particularly forgiving for new home and property buyers, so the process of gifting and transferring property deeds is an option you might be considering. Parents may choose to transfer property to their children who may not be able to buy or find a new home, or they may want to ensure that the property stays within their family before they pass away.
Transferring or gifting property to a family member can be as simple as submitting a property transfer form without having to sign a bill of sale. Knowing the proper way to transfer property within your family, and how to avoid being charged hefty fees is essential when thinking about any kind of property transfer.
Unfortunately, even when transferring property to your family members in exchange for no or little money, you may still have to pay capital gains tax on the market value of your property. Read on to find out more.
What fees 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:
Fees paid by the original owner
- Capital Gains tax (CGT). The CGT cost will depend on the amount of capital gain or capital loss resulting from the CGT event. In 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.
- How much is it? We explain how CGT works in our in-depth guide, but it's basically calculated using the market value of the property minus the expenses you incurred owning it. The figure left after this is your capital gains amount, which is then added to your income tax for that year.
- 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 will know how much you will report that you have gained or loss when filing your income taxes.
- How much is it? Independent valuations cost between $300 - $900 depending on where the property is.
- Legal fees. You might also want to have a lawyer oversee the property transfer and have them draw up contracts or transfer documents with title details, the value and determined ‘price’ of the property, and personal details for both parties. These legal documents can be used in case the validity of the property transfer is ever questioned. These may be referred to as ‘probate fees’.
- How much is it? This will depend on the lawyer used and what services they carry out.
Fees 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 office of revenue.
- How much is it? Stamp duty is calculated based on the state you're in. Use our calculator for a rough guide on how much this would be.
Would you like some help with your property transfer?
TitleXchange offers a fixed price Title Transfer package which gives you professional help with the transfer and stamp duty advice. Fill out the form below to speak with a legal expert from TitleXchange.
How to avoid fees and charges when transferring property
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 and scenarios:
- 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 main residence: If you have been living at the property and have indicated it as your main place of residence (ie. the address is on your current driver’s license and you receive mail there) then you may be exempt from CGT when gifting or selling a property to another.
What is Capital Gains Tax?
The Australian Government defines Capital Gains Tax (CGT) in the following way: “A capital gain or capital loss is the difference between what it cost you to get an asset and what you received when you disposed of it.”
So, according to this, Capital Gains Tax is a tax that applies when you dispose of a certain asset. It’s important to note that CGT is calculated separately from the rest of your income tax but then included in it. Make sure that you are familiar with how to keep records to ensure that you are keeping track of your capital gains and losses. You also need to know how to properly report any capital gains or losses when you are ready to submit your income taxes.
Even if you are gifting property, CGT is applicable. Though the Australian Government says that some of your main personal assets may be exempt from CGT, including your home, there are still instances during a property transfer when CGT will apply such as when transferring investment properties.
Does Capital Gains Tax apply when transferring property within the family or to friends?
When you gift your property you are still charged CGT, even if you sell the property for a small amount to a family member or friend. The Australian Government refers to this process as a ‘CGT event’.
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 arms length refers to both parties in the sale acting independently and having no “influence or control over each in connection with the transaction”.
Get advice about Capital Gains Tax
Transferring property to family or friends can come with time-consuming taxation matters. Seek professional advice about these matters from the Property Tax Specialists today.
The Property Tax Specialists are an award-winning leader in the Australian taxation field, with strengths in accounting, marketing and business. They can help with matters of asset protection, property investing, accounting and taxation, including capital gains tax enquiries. Fill out this form with your query to get into contact with an expert from Property Tax Specialists today.
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FAQ about capital gains tax
If I am living in an investment property and want to sell my previous main residence, how are capital gains calculated?
CGT is generally determined on how long you were living in your previous main residence and, if applicable, how long the residence was rented out for. If you are no longer treating your previous home as your main residence, then the CGT will be based on the valuation of the home when you first lived there, or you first began to rent it out. Speak with an accountant to learn more.
Is vacant land subject to CGT?
Yes, vacant land (provided it is not listed as your main residence) is liable for CGT. However, if you have owned the land for more than a year, you may be eligible for a 50% tax discount. Check with the ATO or a tax advisor for more information.
Seek professional assistance
Keeping property within the family can be a big deal for some people, so a transfer process that is straightforward and inexpensive may be ideal. Avoiding fees like Capital Gains Tax can be done, but you must know how to avoid these charges and always speak with an accountant or tax representative to know exactly what fees you may be subject to.
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My mother died and left me the house and an adjoining residential block of land. Probate will not be final until the end of year. Can I gift the block of land to my husband and if so will stamp duty be applicable?
Hi Patricia,
Thank you for your inquiry.
Our company finder.com.au is a financial comparison website and general information service designed to help consumers to make a better decision. Please note we do not represent any company we feature on our pages.
With your current concern you would need to seek an advice from a solicitor for a legal and expert opinion.
I hope this information has helped.
Cheers,
Harold
After our daughter’s marriage breakup, we took out a small mortgage loan and together with some of our savings bought a house for her and her two children in our names. Once her marital home was sold off, she paid off the mortgage loan and now owes us the remainder – paying us on a regular basis. We are keen to transfer the house into her name. Is this a relatively straightforward process?
Hi Natalie,
Thanks for your question.
Please note that finder.com.au is a financial comparison and information service that helps consumers make better decisions. We are not experts when it comes to changing property ownership.
Each state has different processes and fees relating to changing the property deed. It would be best to reach out to the local government agency that handles property titles and deeds to discuss the process involved in changing ownership.
Additionally, our guide to changing property ownership may also help you.
Cheers,
Anndy
HI Lyn,
Thanks for your question.
When you gift your property, generally, CGT still applies. The Australian Government refers to this process as a ‘CGT event’. 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
You can learn more how much CGT you will be paying for your transfer by reaching out to a Property Tax Specialists. Just provide your information on the above form.
Cheers,
Anndy
Me and my younger sister are on a disability pension and still living at home with our parents who are also on a pension. My parents want to transfer the house over in our names so that my older brother and older sister cannot contest the property in the will.
If I calculated this correctly, it will cost around $12,000 in stamp duty, if say the house was worth around $600,000. We can’t afford that! We will never sell the house, but will remain living in it long past our parents have moved on.
Why is it such an absolute rip off to place a bit of ink on a piece of paper that says: the house now belongs to me and my sister?
Hi Mark,
Thank you for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.
Stamp duty is usually paid by the new owner when a property is being gifted or transferred to them, depending on where your property is located, some transfer may be exempt from stamp duty. It’s best to check with your state office of revenue if exemption might be available to you.
Hope this helps.
Cheers,
May
If my mother was to gift me the title of her house that she purchased in 2014 and currently lives in (and will continue to live in), will she be required to pay CGT given its her primary residence?
I understand I would have to pay stamp duty on market value.
Cheers
Hi Alison,
Thank you for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.
CGT is actually applicable even when the property is being gifted. However, there are circumstances that CGT may not be applied if the property is your main place of residence and not for any profit-making purposes. So most likely, your mother may be exempt from paying CGT.
Regards,
May
i have lived in a family trust property for the last 20 years, paying rent – the property is going to be transferred into my name – what fees will i have to pay?
Hi Carolyn,
Thanks for your question.
As a new owner of the property, most likely, you will have to pay for stamp duty, which is based on the value of the property. You can also find more information how this stamp duty being calculated on this page.
You may also like to check with your state office of revenue if stamp duty exemption might be applied to you.
I hope this has helped.
Cheers,
May
Hi,my husband and i will be knocking down our main residence of 22 years which is mortgage free and our daughter and son in law will be paying for the majority of a duplex to be built on the land.
We will be putting their names on the title deeds to allow them to apply for a mortgage then will be separating into 2 titles at the end of construction.
Is there a way to minimise stamp duty?
Hi Tracy,
Thank you for contacting finder.com.au. We are a financial comparison website and general information service and we are not mortgage specialists so can only give general advice.
Generally, your stamp duty depends on the value of your property. The Office of State Revenue where your property is located will be also able to determine the stamp duty charges. So you’d be best to check with your state revenue office to find out how much tax will be applied to you.
Cheers,
May
Hi there
my sister and I currently have a mortgage on a house which is our primary residence. I am now married and will be moving out to buy a new residential property with my husband so my sister will be buying me out.
Does she/we have to pay stamp duty on the existing property even though we both currently live in it?
thanks a lot
Hi Sonja,
Thank you for contacting finder.com.au we are a financial comparison website and general information service we are not able to offer and specialised advice.
Stamp duty is a fee paid at time of purchase and often when refinancing depending on the circumstances, a mortgage broker can better confirm this for you, it is not something that you can be exempt from due to the property being your main place of residence. You will most likely be exempt from capital gains tax due to the property being the main place of residence for your sister and yourself and not for any profit-making purposes.
Regards
Jodie
thank you
my brother is gifting our family home. which our mother currently resides. the house has never been an investment property in the way of rental, so we have not gained an income from it. does he need to pay CGT? or are we exempt?
thanks
My name is Heather. I am 61 and for the past 2 years live with and care for my 95yo dad in his home as he is unable to care for himself. I am on a carers pension. My dads home will be part of his Estate which will be divided equally between my 3 brothers and me. I am interested in continuing to live in the home after my dad’s death. My brothers are in agreement with the arrangement and I will pay them their share based on market value. Is it an advantage to me and/or my dad if I purchase the home now whilst I am on a pension as I believe stamp duty is less? My dad purchased the home in 1970.
Hi Heather,
Thanks for getting in touch.
The rules surrounding stamp duty vary from state to state so any stamp duty concession that you may be entitled to will depend on the laws of your state government.
Generally, pensioners, health card holders, and those receiving government benefits may be eligible for a duty concession or exemption but you’ll need to check with your local Office of State Revenue.
Once you have this information, it should help you decide whether it would be beneficial for you to purchase the home now. You can learn more about the costs of changing property ownership here. Keep in mind that you may want to speak to a solicitor or conveyancer so that you fully understand the costs and process involved.
All the best,
Belinda
Hi David,
Thanks for reaching out.
I’ve sent you an email to follow up with this enquiry.
Thanks,
Belinda
My partner and I separated just as we sold my house and bought a new house in both our names. My ex agreed that I could take over the mortgage as we bought the house from the profit we made from selling my house. What forms do we need to fill in so I can take his name off the title and so I don’t have to pay stamp duty on the house.
Hi Helena,
Thanks for getting in touch.
If you’d like to remove your ex husband’s name from the property title, you’ll need to complete and submit a transfer of title form which can be accessed from the relevant state government website. For instance, if the property is located in NSW, then you can find the form on the Land and Property Information (LPI) website.
You can learn more about the process on this page, and find the link to your state government website. Keep in mind that you’ll need to get your lender’s consent to remove someone’s name from the property title and you’ll most likely need to get new mortgage documents created.
To see if you’re eligible for stamp duty for this transaction, check with your State Office of Revenue (SOR).
All the best,
Belinda