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, My parents have a rental house that we currently live in.
We are looking to take over the mortgage and add our name to the property.
We have a price for the house at 2million.
We want to pay out my brother and take part ownership of the place.
I would believe there would be so many fees etc involved.
Who do we speak to?
Solicitor, accountants.
And as there is still 100 k left, I assume we split that to?
The property is under my mums name and she has been living with us for the past 2 years. So I assume even if she sold it to us. She should not have to pay a CGT.
Thanks for any advice.
Cheers
Finder
RichardFebruary 3, 2022Finder
Hello A.K.,
This is a complicated situation and it’s a good idea to talk to a conveyancer or solicitor.
It is possible for your parents to transfer the ownership of the property to you by transferring the property title to you.
If your parents still have a mortgage, this can be transferred to you too. But you will need to get the loan approved by the lender because you are a new borrower as far as they are concerned.
The regulations and forms needed to transfer a deed or remove a name differ by state and territory. Visit our Property Title guide to check the links by state.
The other issue is stamp duty. You’ll likely have to pay stamp duty even if you are not buying the property for its full price. You said the property is worth $2 million. If this is its market value, then your state or territory government will calculate your stamp duty cost based on this value.
If the place is your mother’s primary place of residence then she may not have to pay CGT when selling. But if your parents have multiple properties this may not be the case.
I hope this helps!
Regards,
Richard
TonyaDecember 7, 2021
My son and his wife are going to gift me some land, what is the first thing we have to do?
Finder
RichardDecember 9, 2021Finder
Hi Tony,
Generally, gifting a property requires filling out the necessary paperwork with your state revenue office and title office, including a Transfer of Land. Your conveyancer may advise you to organise a Deed of Gift as well.
Even if the transaction is a gift and no money is paid, the government will still require the buyer to pay stamp duty on the purchase.
I hope this is helpful.
Regards,
Richard
LibbieNovember 16, 2021
Hi there! Both parents are wanting to gift the property to us (children), but are both tenants in common. Also there is a mortgage held on the property. Q; Do we have to do 2 separate applications to gift and does the mortgage get transferred also? We are epoa for both parents. Father is in nursing home with dementia and mother resides in the property. Many thanks
Finder
RichardNovember 20, 2021Finder
Hi Libbie,
This is a complicated situation. You will likely have to pay stamp duty, get approval from the lender to take over the mortgage, and file separate paperwork for each owner.
As this is a complex situation, we can’t really give you personal advice. I suggest talking to a conveyancer who can explain the legalities and costs to help you navigate this in the best way possible.
I hope this helps!
Cheers,
Richard
clintonSeptember 27, 2021
if a family member was wanting to gift me 30% ownership of current residence worth say $330,000 , and continue to live in property and rent it , I then buy out their shared they get paid out the 70% and they continue to rent out , is this do able ?
Finder
SarahSeptember 28, 2021Finder
Hi Clinton,
Your question is a bit unclear. Do you mean they would gift you 30%, you buy the remaining 70%, then they continue living in the property as tenants?
This type of arrangement is definitely doable, depending on your situation.
You would need to:
– Qualify for a home loan for the 70%, circa $770,000
– Be getting enough rental income from your relatives to satisfy the lender that your repayments and responsibilities are covered
– Seek tax advice re: tax deductions; as the property is effectively an investment, you will likely be able to claim relevant expenses at tax time, provided you are charging market rent (i.e. not a discounted rent)
– Make a decision re: an investment loan or a principal and interest loan; you can compare options at http://www.finder.com.au/home-loans
In regards to the fees payable to transfer the property into your name, it’ll depend on the state you’re in. Based on a purchase price of $1.1m, you will generally have to pay stamp duty. If you’re a first home buyer, some discounts or exemptions may apply; check with your local state or territory office of state revenue.
Hope this helps!
Cheers,
Sarah
PaulAugust 26, 2021
My wife and I own an investment house.My wife no longer works so there is no tax negative gearing benefit for her share. What is the cheapest way for me to buy her share to gain maximun negative gearing ????
At present the house would be worth $60,000 less than what we paid for it!!!!
Thanks
Finder
SarahSeptember 9, 2021Finder
Hi Paul,
The main concern here is getting the legal title moved from your wife’s name into your name. To do this, you generally have to pay stamp duty based on the current value of the property – although there are some exemptions when transferring property to a spouse. It depends where you live. If you’re in QLD, for instance, the following rules apply:
You don’t pay duty on the transfer of an interest in your home to your spouse if all the following apply:
– the transfer is by way of gift
– after the transfer, you and your spouse will own the entire home as joint tenants or tenants in common in equal shares
– the home will be your principal residence.
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, My parents have a rental house that we currently live in.
We are looking to take over the mortgage and add our name to the property.
We have a price for the house at 2million.
We want to pay out my brother and take part ownership of the place.
I would believe there would be so many fees etc involved.
Who do we speak to?
Solicitor, accountants.
And as there is still 100 k left, I assume we split that to?
The property is under my mums name and she has been living with us for the past 2 years. So I assume even if she sold it to us. She should not have to pay a CGT.
Thanks for any advice.
Cheers
Hello A.K.,
This is a complicated situation and it’s a good idea to talk to a conveyancer or solicitor.
It is possible for your parents to transfer the ownership of the property to you by transferring the property title to you.
If your parents still have a mortgage, this can be transferred to you too. But you will need to get the loan approved by the lender because you are a new borrower as far as they are concerned.
The regulations and forms needed to transfer a deed or remove a name differ by state and territory. Visit our Property Title guide to check the links by state.
The other issue is stamp duty. You’ll likely have to pay stamp duty even if you are not buying the property for its full price. You said the property is worth $2 million. If this is its market value, then your state or territory government will calculate your stamp duty cost based on this value.
If the place is your mother’s primary place of residence then she may not have to pay CGT when selling. But if your parents have multiple properties this may not be the case.
I hope this helps!
Regards,
Richard
My son and his wife are going to gift me some land, what is the first thing we have to do?
Hi Tony,
Generally, gifting a property requires filling out the necessary paperwork with your state revenue office and title office, including a Transfer of Land. Your conveyancer may advise you to organise a Deed of Gift as well.
Even if the transaction is a gift and no money is paid, the government will still require the buyer to pay stamp duty on the purchase.
I hope this is helpful.
Regards,
Richard
Hi there! Both parents are wanting to gift the property to us (children), but are both tenants in common. Also there is a mortgage held on the property. Q; Do we have to do 2 separate applications to gift and does the mortgage get transferred also? We are epoa for both parents. Father is in nursing home with dementia and mother resides in the property. Many thanks
Hi Libbie,
This is a complicated situation. You will likely have to pay stamp duty, get approval from the lender to take over the mortgage, and file separate paperwork for each owner.
As this is a complex situation, we can’t really give you personal advice. I suggest talking to a conveyancer who can explain the legalities and costs to help you navigate this in the best way possible.
I hope this helps!
Cheers,
Richard
if a family member was wanting to gift me 30% ownership of current residence worth say $330,000 , and continue to live in property and rent it , I then buy out their shared they get paid out the 70% and they continue to rent out , is this do able ?
Hi Clinton,
Your question is a bit unclear. Do you mean they would gift you 30%, you buy the remaining 70%, then they continue living in the property as tenants?
This type of arrangement is definitely doable, depending on your situation.
You would need to:
– Qualify for a home loan for the 70%, circa $770,000
– Be getting enough rental income from your relatives to satisfy the lender that your repayments and responsibilities are covered
– Seek tax advice re: tax deductions; as the property is effectively an investment, you will likely be able to claim relevant expenses at tax time, provided you are charging market rent (i.e. not a discounted rent)
– Make a decision re: an investment loan or a principal and interest loan; you can compare options at http://www.finder.com.au/home-loans
In regards to the fees payable to transfer the property into your name, it’ll depend on the state you’re in. Based on a purchase price of $1.1m, you will generally have to pay stamp duty. If you’re a first home buyer, some discounts or exemptions may apply; check with your local state or territory office of state revenue.
Hope this helps!
Cheers,
Sarah
My wife and I own an investment house.My wife no longer works so there is no tax negative gearing benefit for her share. What is the cheapest way for me to buy her share to gain maximun negative gearing ????
At present the house would be worth $60,000 less than what we paid for it!!!!
Thanks
Hi Paul,
The main concern here is getting the legal title moved from your wife’s name into your name. To do this, you generally have to pay stamp duty based on the current value of the property – although there are some exemptions when transferring property to a spouse. It depends where you live. If you’re in QLD, for instance, the following rules apply:
You don’t pay duty on the transfer of an interest in your home to your spouse if all the following apply:
– the transfer is by way of gift
– after the transfer, you and your spouse will own the entire home as joint tenants or tenants in common in equal shares
– the home will be your principal residence.
It’s worth contacting the state office of revenue in your state or territory for clarification – you can find that info here: https://www.finder.com.au/home-loans/stamp-duty-calculator
You may also be keen to refinance the home loan, if it’s currently in both names, so the loan is in your name only. You can look at your options here: https://www.finder.com.au/home-loans/refinancing-home-loans
Cheers,
Sarah