Fees when gifting or transferring a property title to a child or family member

Everything you need to know when transferring a property title, including the different ways to transfer and understanding the costs.

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Richard Whitten

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Key takeaways

  • Gifting property is not free; stamp duty on market value and potential capital gains tax apply.
  • Valuation costs often range from $300 to $900, crucial for market value assessments.
  • CGT exemptions apply if the property was acquired before 20 September 1985 or is your main residence.

Can I gift my house to a family member for free?

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 cannot 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.

Accessing property titles varies by state and territory.

Do you have to pay stamp duty on a gifted property?

In many cases, transfer duty (stamp duty) is charged 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 Taxation 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."

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.

Learn how much stamp duty you may have to pay

What if you're gifting part of a property to someone?

If you transfer part of a property, transfer duty is generally worked out on the dutiable value of the interest being transferred — which is typically based on the higher of the consideration paid (if any) and the market value of that interest — and may be affected by any exemptions or concessions.

One of our readers reached out and asked, "When selling 1/2 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. Each state and territory has its own rules for registering and transferring property titles, and the rules on stamp duty are also different in each state and territory. Capital gains tax, on the other hand, is a federal tax, so the same rules apply across Australia.

Use our stamp duty calculator for a guide on how much stamp duty may cost.

Ways to transfer the property

There are 2 ways you can transfer a property to a family member: gifting and selling.

Gift box

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).

Money

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. 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

Money, dollar, coin 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.

Money, dollar, coin 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.

Money, dollar, coin 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

Money, dollar, coin Stamp duty. Also referred to as transfer duty, 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.

Money, dollar, coin 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.

Example: Selling property to a family member at a discount

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.
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Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

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206 Responses

    Vicki's avatar
    VickiMarch 14, 2022

    My retired parents are on a 804 bridging visa and own their own home (which they have lived in for 10 years). They want to downsize, can you offer any advice on how they can avoid foreign investment tax or CGT?

      Richard Whitten's headshotFinder
      RichardMarch 16, 2022Finder

      Hello Vicki,

      Generally, the main residence is exempt from capital gains tax (CGT).

      While the rules relating to CGT are complex, it is advisable to speak with tax professionals to obtain professional advice.

      I hope this helps.

      Regards,
      Richard

    Sarah's avatar
    SarahMarch 10, 2022

    Hi, when transfer a investment property from parents to kid. Are the fees roughly the same in either gifting or selling?

      Richard Whitten's headshotFinder
      RichardMarch 19, 2022Finder

      Hi Sarah,

      According to the ATO, your capital gains tax (CGT) is based on the market value of the property if you sell, transfer or gift an investment property to a family member. You will also have to pay stamp duty. You can claim the main residence exemption from CGT if the property was your main residence (your home). But not for an investment property.

      I hope this helps.

      Regards,
      Richard

    Jacobb's avatar
    JacobbMarch 9, 2022

    Can a property be gifted if there is a mortgage remaining on the property? how is that treated

      Sarah Megginson's headshotFinder
      SarahMarch 18, 2022Finder

      Hi Jacobb,

      If there is mortgage on the property, the title is held by the lender. If you gift the property, the transferee or the new owner will be responsible for any outstanding loans.

      For example, if you’re gifted a house worth $500,000 and the loan is $200,000, you’ll need to take out a loan worth $200,000 to take over the remaining debt.

      Note that such transfers or mortgage changes are subject to fees, which varies by lender so make sure to speak with you mortgage provider for the details.

      I hope this helps!

      Regards,
      Sarah

    HELEN's avatar
    HELENMarch 7, 2022

    I receive a small aged pension and a fortnightly superannuation payment. I own my own dwelling and have no debts. I want to know the ramifications of buying a house with my daughter and son-in-law, which would be more suited to me as I age and in which I would live after selling my current property and using some of my superannuation. I would contribute around 60% of the price of the new property and the property would be in all in our names. Where does that leave me in relation to future pension payments?

      Richard Whitten's headshotFinder
      RichardMarch 10, 2022Finder

      Hi Helen,

      If you sell your home, you will need to notify Centrelink of what you intend to do with the money from the sale.

      If you intend to buy a new home within 12 months, then the portion of the sale proceeds that will be put towards the purchase of the new home will be exempted under the assets test for up to 12 months. Deemed income on the proceeds will be included in your assessment. The proceeds will become assessable under the assets test at the end of the 12 months exemption or when the home is acquired, whichever happens first. However, if you are then experiencing delays beyond your control in acquiring a new home, you may ask for an extension of the asset test exemption for up to an additional 12 months. Rent assistance may be payable if you pay rent while you are looking for another home, or are waiting for another home to be built.

      If you do not intend to buy a new home within 12 months or do not intend to spend all of the proceeds on the new home, then the sale proceeds or the excess proceeds will be treated like all other financial assets. This means that income will be deemed to have been earned on the money under the income test, and will also be immediately counted as an asset under the assets test.

      Regards,
      Richard

    Hamish's avatar
    HamishMarch 6, 2022

    How would the CGT be calculated if the land being gifted were to be divided when it was purchased as a combined lot (1/3 Example Street)? Also, if the combined land was purchased on a loan, would the bank need to be consulted before gifting the land?

      Sarah Megginson's headshotFinder
      SarahMarch 9, 2022Finder

      Hi Hamish,

      If the property is jointly owned, you need to establish each owner’s share or interest in it for capital gains tax purposes. Depending on the type, location, and value of the property, owners’ tax obligations depend on the relevant state’s tax laws.

      As for the lender, they need to be notified of any change in ownership. It needs to be established whether the current lenders would need to clear the outstanding loan dues before gifting the property or would the donee besides accepting the gift, also has to accept the loan obligation.

      I hope this helps!

      Cheers,
      Sarah

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