Many people want to know the proper way of transferring property to family members. In many cases, it’s as easy as submitting a property transfer form. However, it’s important to prepare for the associated expenses, even when gifting real estate to a loved one.
The term conveyance means transferring land or property to another party. It’s a common term in real estate transactions between sellers and buyers. However, it also refers to situations where you give or receive a house as a gift. Various legal documents involved include a title, deed, or sales contract.
What’s the process for transferring property to family members in Australia?
Selling or gifting a house and land transfers the title as specified in a written contract. Let’s look at both these options.
Gifting a house to a family member
When you give your house and land to a family member, we recommend you contact your legal advisor to assist you. A form 1 Transfer will have to be prepared and submitted for stamp duty assessment and stamp duty will need to be paid even though consideration is not been paid for the transfer. The transfer form will then need to be registered with the Department of Natural Resources and Mines.
Is there a stamp duty on gifting property?
As stated above stamp duty (now called transfer duty) is payable. You are responsible for paying a stamp duty based on the property’s market value. You should also discuss your case with Queensland solicitors familiar with property law to determine whether you will also have to pay capital gains tax (CGT).
As a reminder, stamp duty will be payable on most kinds of transactions which are in writing including but not limited to a transfer of real estate leasehold or freehold, and motor vehicles.
When gifting property to family members it’s easier to do it correctly when you have the right guidance and support. Qualified solicitors who practice in the area of conveyancing in QLD can help you through the process with a minimum of fuss. We suggest you contact a lawyer before beginning the process so that you become familiar with the requirements of transferring property.
When will you have to pay capital gains tax (CGT)?
In addition to stamp duty on gifting property, you may also have to pay capital gains tax. As long as you live in a property as your primary residence, this won’t apply to your case. However, if it wasn’t your primary residence, the person giving the gift will pay CGT. For more details on capital gains tax, we recommend you contact a tax lawyer or your accountant.
Selling a house to a family member
You can also transfer title property by selling it to a family member. Parents often do this for children to give them a better deal than buying a property at market rates. Keep in mind that selling a home involves stamp duty fees based on the market value of the home.
Therefore, if you sell it at a discounted price, you will still have to pay full stamp duty based on its market value and obviously, you will have to pay to get an estimate of the market value of your home. It’s good to keep this in mind when setting a price. You should also factor in capital gains tax if you don’t currently live in the home.
What are the fees for transferring property to family members?
Keep in mind the main fees to consider when selling or giving your home to family members. Discuss each of these with the solicitor handling your conveyancing services in QLD. Here, we’ve broken them out by who pays the fees.
What are the fees paid by the original owner?
- Capital Gains Tax (CGT). The CGT cost is based on the amount gained or lost in the sale. Any capital gain is calculated by subtracting your proceeds minus the cost of the asset. However, you will pay more or less depending on your income. (CGT is added to your income tax.)
- Valuation costs. A certified valuer can provide the market value of the home prior to the gifting or sale of the home. Valuation fees can be in excess of $1000, so you may want to add this to the original sale price.
- Legal fees. By obtaining an estimate from the Queensland solicitors handling your case, you can include the cost of drawing up documents to the sales price offered to your family member. Ensure that you have the necessary paperwork to validate the sale or gift if any legal authority should question it.
What are the fees paid by the new owner?
- Stamp duty. The Stamp Duty is based on the land or property value you wish to transfer to a family member. The applicable percentage varies from state to state, so you can ask your solicitor to help you calculate this cost.
- Legal fees. Hire an experienced firm offering conveyancing services in QLD to review the final documents prior to signing them.
How does selling or gifting a house to a family member at a discount work?
Let’s say, Amanda and John sell their home to their daughter Morgan for $200,000. Morgan gives her parents the $200,000 while they hire a property valuer to determine the market price. The market value comes in at $400,000.
Morgan’s costs therefore are:
- Sale price: $200,000
- Stamp duty (calculated at $400,000)
- Transfer and mortgage registration fees.
Amanda and John lived in the house for eight years before selling it to their daughter, so the sale won’t generate CGT.
How do I transfer property to a family member tax-free in Queensland?
In standard cases you can’t transfer property without paying stamp duty. Transferring property to family members always generates some kind of tax. However, gifting a house allows it to pass to the new owner with no money changing hands. You will still have expenses, such as legal fees, stamp duty on gifting property, and legal expenses to consider. If you didn’t live in the home prior to giving it away, you may also have to pay capital gains tax.
Can my parents sell me their house for $1?
Yes! However, you still have to go through the valuation process in order to calculate the stamp duty and determine CGT costs, if applicable.
How to avoid fees and charges when transferring property in Queensland?
The Queensland Government website lists all the exemptions for the transfer duty. Exemptions include but are not limited to:
- Circumstances where a court order or a binding financial agreement under the Family Law Act are obtained directing the transfer of property from one spouse to another.
- Transfers pursuant to a will after someone dies.
- Transfers to a new trustee in circumstances where a new trustee is appointed under a trust.
You can visit the Queensland Government website to review all the exemptions. For assistance with Brisbane Property Conveyancing, consult with a qualified solicitor with the right experience and background to best assist you.
Where can I find up-to-date prices for government fees and conveyancing services?
Since online conveyancing in QLD services is very competitive, there are various calculators of convening pricing in each modern conveyancing firm, but one of the advantages of our calculator is that we send users a list of all government fees with up-to-date prices, so that our potential clients can have a better idea of how much and what they will have to pay.
Also, if you’re still not sure about buying or selling property, it makes sense to take a look at the property transfer step-by-step infographic. This process is common to all conveyancing firms and will allow you to better understand how things work.