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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I have lived in my families ancestral home for 20 years – it has been in my family since the 1900’s. When my grandmother passed away in 1990 she left her 50% share to my mother. When my great aunt passed away 1998 she left her 50% share also to my mother. The house has been fully in my mums name since her mum and aunt passed away. I have lived in the house continually as my principal place of residence since 1995.
Can we add my name to the property title and if so what would be payable?
JodieMay 12, 2015
Hi Kathleen,
Thank you for contacting us.
You are able to alter the ownership of the house so that it is in your name, have a look at our guide to changing property ownership, there may be fees involved and each state and territory deal with this in their own way so please contact your local state government office for further information.
You should also consider speaking to a conveyancer who will give expert and practical advice on what to do at every step of the process.
Regards,
Jodie
NickyMay 7, 2015
Hi, How to avoid CGT when gifting an investment property? Thank you
Finder
ShirleyMay 11, 2015Finder
Hi Nicky,
Thanks for your question.
Gifting an investment property is considered a CGT event and hence, will most likely incur capital gains tax. If you have owned the asset for a period of more than 12 months, you may be eligible for a 50% discount.
For a more detailed discussion of your circumstances, please contact a property tax specialist.
Cheers,
Shirley
SerenaApril 20, 2015
Hi, my parents who are living oversea are planing to transfer one of their property to me (I am Australian PR and now working in Sydney). If they do that, will I need to pay CGT just for getting the property? Or I will just need to pay CGT if I am going to sell it in the future? Thanks.
Finder
ShirleyApril 20, 2015Finder
Hi Serena,
Thanks for your question.
Australian residents are liable for tax on their worldwide income, whereas, non-residents are only liable for their income from an Australian source.
If upon purchasing your property you moved in as soon as practicable, then you can nominate the dwelling as your main residence when acquired (this includes overseas property) – the condition is that no other property is nominated as your main residence. This generally means it will be exempt from capital gains tax (CGT).
You can use your main residence to generate income for a period of up to six years before it becomes liable for CGT. If another property is elected to be your main residence, your other property will accrue capital gains.
For a more detailed discussion of your circumstances, please contact a tax specialist.
Regards,
Shirley
FernandoApril 7, 2015
Hi,
My father past away about 6 years ago & my mother is 82 years old. My parents own the family home 50/50 & my fathers share has not been transferred to my mother yet.
My mother suggested that she transfer the house to me 100% (I am an only child) but I am worried that there will be stamp duty for me to pay?
My mother lives in this house (& will continue to live in this house until she passes away), my wife & eldest daught see my mother most days & my mother pretty much looks after herself with a little bit of help.
If she transfers the house to me now (rather than when she passes away) & she continues to live in the home do I pay stamp duty?
If she transfers the house to me now (rather than when she passes away) & she continues to live in the home & needs to go to a nursing home, is she penalized in any way?
If she transferred my fathers half to me rather than to herself does this make any difference?
Thank you
Fern
Finder
MarcApril 10, 2015Finder
Hi Fernando,
thanks for the question.
When transferring property to family, stamp duty is usually payable based on a valuation from an independent valuer.
I would recommend contacting a qualified conveyancer to talk about the legal and financial implications of the different scenarios you’ve asked about, as these will depend on your personal circumstances.
Sorry I couldn’t be of more help,
Marc.
RayApril 7, 2015
hi,
we own a block of land we purchased two years ago.
the land value has gone up we are to pay capital gains.
the land title is under my wife’s name.
would we save if we transfer it under both of our names.
thanks,
ray
Finder
ShirleyApril 7, 2015Finder
Hi Ray M,
Thanks for your question.
This will depend on you and your wife’s income tax bracket and who has the lower tax bracket.
For a more detailed discussion of your circumstances, please contact a tax specialist.
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.
I have lived in my families ancestral home for 20 years – it has been in my family since the 1900’s. When my grandmother passed away in 1990 she left her 50% share to my mother. When my great aunt passed away 1998 she left her 50% share also to my mother. The house has been fully in my mums name since her mum and aunt passed away. I have lived in the house continually as my principal place of residence since 1995.
Can we add my name to the property title and if so what would be payable?
Hi Kathleen,
Thank you for contacting us.
You are able to alter the ownership of the house so that it is in your name, have a look at our guide to changing property ownership, there may be fees involved and each state and territory deal with this in their own way so please contact your local state government office for further information.
You should also consider speaking to a conveyancer who will give expert and practical advice on what to do at every step of the process.
Regards,
Jodie
Hi, How to avoid CGT when gifting an investment property? Thank you
Hi Nicky,
Thanks for your question.
Gifting an investment property is considered a CGT event and hence, will most likely incur capital gains tax. If you have owned the asset for a period of more than 12 months, you may be eligible for a 50% discount.
For a more detailed discussion of your circumstances, please contact a property tax specialist.
Cheers,
Shirley
Hi, my parents who are living oversea are planing to transfer one of their property to me (I am Australian PR and now working in Sydney). If they do that, will I need to pay CGT just for getting the property? Or I will just need to pay CGT if I am going to sell it in the future? Thanks.
Hi Serena,
Thanks for your question.
Australian residents are liable for tax on their worldwide income, whereas, non-residents are only liable for their income from an Australian source.
If upon purchasing your property you moved in as soon as practicable, then you can nominate the dwelling as your main residence when acquired (this includes overseas property) – the condition is that no other property is nominated as your main residence. This generally means it will be exempt from capital gains tax (CGT).
You can use your main residence to generate income for a period of up to six years before it becomes liable for CGT. If another property is elected to be your main residence, your other property will accrue capital gains.
For a more detailed discussion of your circumstances, please contact a tax specialist.
Regards,
Shirley
Hi,
My father past away about 6 years ago & my mother is 82 years old. My parents own the family home 50/50 & my fathers share has not been transferred to my mother yet.
My mother suggested that she transfer the house to me 100% (I am an only child) but I am worried that there will be stamp duty for me to pay?
My mother lives in this house (& will continue to live in this house until she passes away), my wife & eldest daught see my mother most days & my mother pretty much looks after herself with a little bit of help.
If she transfers the house to me now (rather than when she passes away) & she continues to live in the home do I pay stamp duty?
If she transfers the house to me now (rather than when she passes away) & she continues to live in the home & needs to go to a nursing home, is she penalized in any way?
If she transferred my fathers half to me rather than to herself does this make any difference?
Thank you
Fern
Hi Fernando,
thanks for the question.
When transferring property to family, stamp duty is usually payable based on a valuation from an independent valuer.
I would recommend contacting a qualified conveyancer to talk about the legal and financial implications of the different scenarios you’ve asked about, as these will depend on your personal circumstances.
Sorry I couldn’t be of more help,
Marc.
hi,
we own a block of land we purchased two years ago.
the land value has gone up we are to pay capital gains.
the land title is under my wife’s name.
would we save if we transfer it under both of our names.
thanks,
ray
Hi Ray M,
Thanks for your question.
This will depend on you and your wife’s income tax bracket and who has the lower tax bracket.
For a more detailed discussion of your circumstances, please contact a tax specialist.
Cheers,
Shirley