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 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."
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 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. 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 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.
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Hi there. My husband has only his name on the title of our home of which we only have a small mortgage on. I have children from a previous marriage. In the event of my death how can I make sure that my half of the property is passed to them in value only? For example if they were to apply for a loan they could then state the equity they would have in the home. Can I just stipulate it in my Will?
Finder
RichardMarch 10, 2022Finder
Hi Kay,
You’ll need to have a discussion with your husband before you can have your name added to the property title. Then speak with your mortgage provider about the changes. And you should consult a solicitor or conveyancer about the legal technicalities of ownership.
You can consider becoming “tenants in common.” This way when one owner dies, their will decides who gets the ownership share. Our article on how to add your partner’s name to your house title can provide more details about this.
If you decide to own the property as joint tenants, then in the event of your death your husband would own the entire property. This is why a tenants in common ownership arrangement might suit you better.
Stamp duty exemptions may apply but you need to meet a number of conditions to qualify. You can check our guide to see the stamp duty exemptions per state or territory.
I hope this helps!
Regards,
Richard
RUMarch 2, 2022
Hi there,
I just want to know how we can split the money after selling the house:?
we are tow brothers and the house is not in my name, but we share all the cost,
Finder
SarahMarch 4, 2022Finder
Hi there,
It depends on the specific arrangement, how much the loan has left on it and who contributed to the deposit as to how you work out the final split.
If you have both made equal contributions to the deposit, the mortgage and the bills, then a 50/50 split is likely to be considered fair. However if one of you has contributed more, you may wish to split the profits differently.
It would definitely be worth getting some professional legal advice to make sure everyone receives an equal, fair split.
Cheers,
Sarah
TerryMarch 2, 2022
My partners mum, has sold her home, and wants to buy her daughter a home, in an over 55s village, can she do this in NSW
Finder
SarahMarch 4, 2022Finder
Hi Terry,
Generally, to be eligible to buy property and live at an over 55s village, you must be 55 or older, live in NSW, be able to live on your own (with or without support), and not own a property that you could live in.
It might be worth seeking professional advice from a property lawyer broker to get personalised advice regarding your situation.
I hope this helps!
Regards,
Sarah
PuraMarch 1, 2022
hi there, I want to buy a small house/ apartment for my daughter (18 yo) by paying the full amount. What are the tax implications if it is not a loan? Should it be a loan or not? if it is a loan how do I document it? thank you.
Finder
SarahMarch 4, 2022Finder
Hi Pura,
If you have the means to make a cash purchase and gift the apartment to your daughter, then there would be no tax implications, as the property is no longer yours and it’s not an income-producing asset.
There may be tax advantages to taking out a loan and treating the property as an investment, with your daughter as the tenant. This tax advantages could be worth a significant amount of money, so it’s definitely worth speaking to an accountant for professional advice before you buy.
I hope this helps!
Regards,
Sarah
NujraFebruary 18, 2022
hi there. My mum & dad are owners of the family home. dad passed away years ago but we have never removed him from the title. mum would like to add myself and my wife to the title now and removing dads name. home is our family home and been living there for over 20 years. whom should l talk to ? will i be paying stamp duty on this transaction or CGT? thanks
Finder
RichardFebruary 26, 2022Finder
Hi Nujra,
If this is your family home then CGT probably won’t apply here. But adding your names to the property title may require a stamp duty payment based on the current market value of the property (even if you’re not paying any money for it). There are exemptions to this for some family members (i.e. partners) but this varies by state/territory and may not apply in your case.
It’s a good idea to speak with tax professionals or conveyancers to obtain professional advice.
From supply and demand through to location, facilities and planned infrastructure projects, there are plenty of factors that can influence property value.
Get the most out of your property sale with the right real estate agent with these simple tips.
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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 there. My husband has only his name on the title of our home of which we only have a small mortgage on. I have children from a previous marriage. In the event of my death how can I make sure that my half of the property is passed to them in value only? For example if they were to apply for a loan they could then state the equity they would have in the home. Can I just stipulate it in my Will?
Hi Kay,
You’ll need to have a discussion with your husband before you can have your name added to the property title. Then speak with your mortgage provider about the changes. And you should consult a solicitor or conveyancer about the legal technicalities of ownership.
You can consider becoming “tenants in common.” This way when one owner dies, their will decides who gets the ownership share. Our article on how to add your partner’s name to your house title can provide more details about this.
If you decide to own the property as joint tenants, then in the event of your death your husband would own the entire property. This is why a tenants in common ownership arrangement might suit you better.
Stamp duty exemptions may apply but you need to meet a number of conditions to qualify. You can check our guide to see the stamp duty exemptions per state or territory.
I hope this helps!
Regards,
Richard
Hi there,
I just want to know how we can split the money after selling the house:?
we are tow brothers and the house is not in my name, but we share all the cost,
Hi there,
It depends on the specific arrangement, how much the loan has left on it and who contributed to the deposit as to how you work out the final split.
If you have both made equal contributions to the deposit, the mortgage and the bills, then a 50/50 split is likely to be considered fair. However if one of you has contributed more, you may wish to split the profits differently.
It would definitely be worth getting some professional legal advice to make sure everyone receives an equal, fair split.
Cheers,
Sarah
My partners mum, has sold her home, and wants to buy her daughter a home, in an over 55s village, can she do this in NSW
Hi Terry,
Generally, to be eligible to buy property and live at an over 55s village, you must be 55 or older, live in NSW, be able to live on your own (with or without support), and not own a property that you could live in.
It might be worth seeking professional advice from a property lawyer broker to get personalised advice regarding your situation.
I hope this helps!
Regards,
Sarah
hi there, I want to buy a small house/ apartment for my daughter (18 yo) by paying the full amount. What are the tax implications if it is not a loan? Should it be a loan or not? if it is a loan how do I document it? thank you.
Hi Pura,
If you have the means to make a cash purchase and gift the apartment to your daughter, then there would be no tax implications, as the property is no longer yours and it’s not an income-producing asset.
There may be tax advantages to taking out a loan and treating the property as an investment, with your daughter as the tenant. This tax advantages could be worth a significant amount of money, so it’s definitely worth speaking to an accountant for professional advice before you buy.
I hope this helps!
Regards,
Sarah
hi there. My mum & dad are owners of the family home. dad passed away years ago but we have never removed him from the title. mum would like to add myself and my wife to the title now and removing dads name. home is our family home and been living there for over 20 years. whom should l talk to ? will i be paying stamp duty on this transaction or CGT? thanks
Hi Nujra,
If this is your family home then CGT probably won’t apply here. But adding your names to the property title may require a stamp duty payment based on the current market value of the property (even if you’re not paying any money for it). There are exemptions to this for some family members (i.e. partners) but this varies by state/territory and may not apply in your case.
It’s a good idea to speak with tax professionals or conveyancers to obtain professional advice.
I hope this helps.
Cheers,
Richard