Generally, you may be liable for stamp duty and other taxes when you transfer property to a family member. The amount of stamp duty and other taxes you may be liable for will depend on several factors, including the property’s value, the relationship between you and the family member, and the state or territory in which the property is located.
Property is transferred to family members in three main ways: selling, gifting and transferring between couples. Each has a specific method that needs to be followed. Read on to find out.
1. Selling Property to a Family Member
Selling a property to a family member is similar to an ordinary purchase. It is best to have a contract of sale to protect both parties. You can agree to sell the property for any price; in many cases, the property is worth much less than the agreed price. In this instance, you must get a market valuation done by an independent property valuer. However, if the parties are related, stamp duty will be assessed on the greater amount paid or the value by the independent valuer.
2. Gifting Property to a Family Member
When you gift a property to a family member, you must register the transfer and have a government-issued document to support it. You also need to get a property market valuation from an independent valuer. Even though you and your family member may agree that no money will change hands, you will still have to pay stamp duty on the market valuation of the property. You can do this through the PEXA platform, and Revenue NSW will assess stamp duty.
3. Transferring Property Between Spouses
This exemption means that no stamp duty is charged on the transfer of residential property if the property will be held by a married or de facto couple as tenants in common in equal shares or joint tenants and will be their primary place of residence. De facto partners must have lived together for at least two years to qualify for this exemption.
Section 68 of the Duties Act exempts marital or relationship property transfer from stamp duty. The exemption is only granted if the transfer or agreement meets the requirements of the section. These exemptions are only the case if all requirements under the Act are met. A Solicitor or Conveyancer can help determine if all the requirements are met.
Are There Implications of Transferring Property to a Family Member Receiving a Pension?
If you or the person receiving the property have a pension, it is important to consider how the transfer will affect that pension. Centrelink has strict rules about disposing of assets as a gift to family members and how this will affect their eligibility for a pension. Before going through with the transfer, make sure you understand these implications.
There are many different ways that property can be transferred between family members. Some methods are simpler than others, and some may even be tax-free. It is important to consult with a lawyer or tax advisor to determine the best way to transfer property between family members, as there may be legal and tax implications depending on the method used.
Bickell and Mackenzie is a well-known family-owned law firm within the Redlands area. It specialises in conveyancing for buying and selling houses, commercial businesses and retirement homes, wills and estates administration and family law. If you need a lawyer specialising in wills and estate in Redland Bay, phone our office at (07) 3206 8700.