Many property transfers in Australia require paying stamp duty (also called transfer duty), but not all. There are some circumstances, like during a marriage or relationship breakdown, or when a property is passed down in a family, where you won’t have to pay this fee.
This article will explore how you can transfer property to a family member without paying stamp duties.
Taxes to Consider When Transferring a Property
When transferring property to a family member in Australia, there are two main taxes to consider:
- Stamp Duty: Stamp duty (or transfer duty) is a tax charged by state and territory governments when property ownership changes hands. The amount depends on the property value and location. Some transfers to family are exempt; however, stamp duty still applies in many cases.
- Capital Gains Tax: If you gift a property to a family member, you won’t have to pay capital gains tax (CGT). However, if money changes hands or you make a profit from the transfer, CGT may be payable on the gain. If the gifter has owned the property for more than 12 months, they may get a 50% CGT discount.
How to Transfer Property Without Paying Stamp Duty to a Family Member
There are a few main ways you can transfer property to a family member in Australia without paying stamp duties:
- Gifting the property: In some states, you can transfer property to an immediate family member like a spouse, parent or child as a gift without incurring stamp duty. This is often called a “love and affection” transfer.
- Inheriting the property: If you inherit a property from a deceased family member, you generally won’t need to pay stamp duty on the transfer.
- Transferring the property in a divorce: Stamp duty usually doesn’t apply when transferring property to a spouse or de facto partner as part of a divorce settlement, as long as certain conditions are met.
- Adding or removing someone from the title: In some cases, like when moving in with or separating from a partner, you may be able to add or remove them from the property title without paying stamp duty.
The rules for each scenario vary by state and territory in Australia, so it’s essential to check the specific regulations with your local revenue office or get professional legal advice.
Legal Framework Surrounding Property Transfers
The following acts have provisions about property transfers and the costs involved, including stamp duty and capital gains tax implications:
- Conveyancing Acts: These are the rules for transferring property ownership. They cover everything from document preparation to settlement and, in many cases, outline the responsibilities of each party involved.
- Duties Acts: These set the rates and conditions for the various duties on property transactions, including stamp duty. They give the landlord an idea of the fees they will pay when selling or transferring property. Consideration is also given to the type of transfer, whether it be a will or inheritance, marriage breakdown, or company restructure.
The laws vary by state and territory; however, conveyancing acts and duties acts are the ones to focus on, as well as any contract you sign. Each scenario will also have its own rules and duty exemptions under the Duties Act. Knowing these is important if you want to avoid stamp duty.
State-Specific Rules on Transferring Properties to a Family Member
Stamp duty and property transfer rules vary between states and territories, so it’s important to check your local regulations.
Here’s a summary of the key rules for transferring to family members in each state and territory:
Australian Capital Territory (ACT)
- Full stamp duty exemption is applied for properties under $1m between spouses/partners.
- Concessional rates apply for eligible transactions on properties over $1m between spouses/partners.
- Pensioners are exempted on properties up to $330,000, with partial concession up to $530,000.
New South Wales (NSW)
- No stamp duty is required on the transfer of residential land between married couples or de facto partners if property is held equally after the transfer.
- De facto couples must have lived together for 2+ years to qualify.
- Exemption only applies to the residential part if the property was also used for other purposes.
- Exemption is available after a marriage or relationship breakdown if the property is transferred to one party, children, or a trustee.
Northern Territory
- Limited stamp duty exemptions are for new houses and land packages only.
- There are no concessions on established properties.
Queensland
- Exemption for transfer of a home to a spouse, changing property tenure (joint tenants vs tenants in common) without changing ownership.
- There are no other exemptions for gifting residential property to a family.
- There are exemptions for transfers between divorcing/separating spouses.
South Australia
- There is no stamp duty on transfers between spouses/domestic partners.
- Exemption for transfer of primary production land between certain family members.
- There is no stamp duty if the property is inherited under a will.
- There is no stamp duty for non-residential/non-primary production property transfers.
Victoria
- Full stamp duty exemption applies to properties up to $600,000 for first-home buyers.
- Concessions on properties range from $600,001 to $750,000 for first-home buyers.
- There are no family exemptions.
Tasmania
- Until 30 June 2024, a 50% stamp duty concession on established homes is available, up to a maximum of $600,000.
- There are no family exemptions.
Western Australia
- There are no family or first-home buyer exemptions.
Get Professional Advice Before Transferring a Property
Transferring to a family member seems simple, but a mistake could cost you. The rules around Australia’s stamp duty, capital gains tax, and property transfers are complicated and differ from state to state.
Because these matters are complex, we always recommend seeking professional advice on how to carry out an asset protection strategy. For more information, get in touch with a professional property valuer from our Duo Tax team, and we’ll guide you through the process.
Key Takeaways
- Stamp duty is a mandatory tax in Australia during property transfers but can sometimes be avoided or minimised when transferring to a family member.
- Understanding the legal framework around property transfers can clarify why and when stamp duty is applicable.
- There are legal methods such as gifting property, inheriting property, and property settlement in divorce cases for transferring property to a family member without incurring stamp duty.
- If you make a profit on the transfer, capital gains tax may apply. However, if you’ve owned the property for over 12 months, you may get a 50% discount.
- Rules differ significantly between states and territories, so check your local revenue office website for specific information.
- Always seek professional advice from a tax accountant or lawyer before transferring property to ensure you meet all legal obligations.
Ready to get started?
Talk to one of our friendly property experts to get a free quote or more Information.