Transfer of property title to family

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The transfer of property title often occurs for reasons such as retirement, inheritance, or simply as part of estate planning. Having a comprehensive understanding of the process and its legal ramifications is critical to protecting your interests.

Property transfers within families can swiftly become intricate endeavours, involving detailed documentation, regulatory compliance, and potential tax implications. Whether it’s passing down a family home from one generation to the next or redistributing assets to accommodate changing life circumstances, each scenario presents a unique set of challenges.

Whether you’re embarking on the journey of retirement, contemplating inheritance arrangements, or seeking clarity on estate planning, this blog aims to clarify the process, empowering you with knowledge and insight every step of the way.

We will delve into the nuances of property transfers, offering invaluable advice, practical tips, and expert guidance to help you navigate this intricate terrain with confidence.

Common Reasons for Transferring Property Title to Family

This can happen between spouses, de facto couples, parents and children, family members, as well as friends. Property transfers can occur for several reasons, including marriage, divorce or death.

Types of Property Transfers

The most common ways to transfer property title are:

  1. Transfer of property title by selling (deed of sale)
  2. Transfer of property title by gifting (deed of gift)
  3. Transfer of property title by changing ownership

Deed of Sale

he process of selling a property to family members at fair market value is:

  1. Preparing a contract of sale.
  2. Signing the contract of sale.
  3. Entering the cooling-off period.
  4. Completing the land office process.
  5. Paying the taxes and transfer fees.

Benefits and limitations

The property will be subject to stamp duty and capital gains tax (depending on your property’s capital gain or loss) before the government can transfer between family members. You could avoid paying taxes if:

  • You receive less money than its actual market value.
  • You don’t transact at arm’s length during the sale process.
  • The asset is the buyer’s primary residence.
  • The property was registered before 20th September 1985.

Deed of Gift

The process and tax implications surrounding the gifting of property to family members includes:

  1. Determining your property’s market value.
  2. Preparing the deed of value.
  3. Completing the necessary documentation.
  4. Paying the relevant taxes and fees.

Benefits and limitations

When you receive gifted property, you may have to pay capital gains tax. However, you can avoid this tax if:

  • If the donor acquired the property before 20th September 1985, when the capital gains tax was enacted.
  • If the recipient has been residing in the family home and has indicated, it as their primary residence and address.

Important Considerations

There are a variety of important considerations property owners should be aware of.

Pension payments

Given that Centrelink assesses the income from a transfer from the property’s market value and not the price it was sold for, transferring property can impact your eligibility for your pension payments.

Home loans

The new owner will need to take over any loans or mortgages that the property may have, meaning that a lending institution holding the mortgage will need to approve the new owner.

Costs

Outside of taxes, there will likely be other fees involved in the transfer of property. It is highly recommended that a solicitor is engaged to assist you in this complex process. They will help to provide legal advice, draw up the necessary agreements and transfer documents & property titles.

Tax Implications

There are various tax implications associated with transferring property within families, including:

Gift taxes

Australian law does not have a federal gift tax for cash gifts, charitable gift donations or immoveable property. Despite this, depending on the type, location and value of the property real estate may be a taxable gift. This will mean the owner will have tax obligations (depending on the relevant state’s tax laws) to land tax, stamp duty, absentee owner charge and vacant residential tax.

Capital gains tax

CGT must be paid as part of your income tax assessment when transferring a property, meaning the proceeds from the gifting sale of the property will form part of your taxable income.

Inheritance tax

If you inherit a property and that property earns you an income from rent, then you may be liable for capital gains tax if you sell the property inthe future.

Compliance with Laws and Regulations

Adhering to local laws and regulations governing property transfers is critical to ensure that you avoid hefty fees and that your property transfer is successful.

Legal Assistance

Whilst you can transfer property without a solicitor, the process can be complex, and mistakes can be costly. It is wise to use a professional property lawyer for these matters as there are several types of forms that must be properly completed and filed before the transaction can be completed.

If you need any assistance with matters relating to the transfer of property, Owen Hodge is here to help. Our experienced team of conveyancing lawyers are always happy to assist clients in understanding the full ramifications of transferring properties and any other conveyancing matters.

Please feel free to contact us at your earliest convenience to schedule a consultation at 1800 780 770.

Steps Involved in Transferring Property Title to Family

Certain unique circumstances may require property transfers between family members without involving sales or gifts. These situations include:

  • Transfers between de facto partners and married couples
  • Foreign transferees
  • Marriage break-ups

For transfers involving de facto and married partners, there is no requirement to pay transfer duty. Additionally, exemptions from tax obligations apply if the property qualifies as vacant land or serves as the primary family residence. However, married partners are typically required to demonstrate a minimum two-year period of cohabitation to qualify for exemption.

In the event of divorce or separation, the recipient may qualify for property tax exemptions. To be eligible, the property must be transferred to:

  • The partner’s child(ren)
  • Either of the partners individually
  • A trustee designated for the child(ren)

Determine Type of Property Transfer

The type of property transfer that is most appropriate for you can be determined based on factors such as familial relationships, tax implications, and estate planning goals.

Obtain Necessary Documents

Depending on the type of transfer, there will be some necessary documents. These include: 

  • Property titles
  • Deeds
  • Identification documents 
  • Relevant legal agreements.

Legal Paperwork

Transferring property title involves a range of legal paperwork that needs to be filed with the appropriate government authorities or agencies responsible for property transfers.

Seeking assistance from legal professionals will ensure the completeness and accuracy of this paperwork and will minimise the risk of legal disputes or challenges.

Transfer of Possession and Registration

In finalising the property transfer, both parties collaborate with their legal representatives to complete necessary documents like deeds and transfer papers, ensuring compliance with local regulations. 

Subsequently, the transfer is registered with government authorities, guaranteeing its legal recognition and inclusion in official records. Once legalities are resolved, the buyer disburses the remaining funds to the seller according to the agreed terms. Upon the specified completion date, keys and possession are exchanged, and any outstanding balances settled, marking the conclusion of the transaction. Post-transfer, additional duties may include updating utility bills and informing relevant parties of the change in ownership, adhering to any post-transfer obligations outlined in the sale agreement.

Estimated Costs

The costs associated with the transfer of property vary depending on your unique circumstances.

Takeaways

Although it’s possible to transfer property without legal representation, the procedure can be intricate, and errors may prove expensive. Engaging a professional is prudent, given the various forms that require accurate completion and filing before finalising the transaction.

Should you require guidance concerning property transfers, Owen Hodge can help. Our proficient team of conveyancing lawyers is dedicated to aiding clients in comprehending the comprehensive implications of property transfers and any related conveyancing issues.

Frequently Asked Questions

Seeking professional advice can help to avoid disputes in the transfer process.

Whether or not you can move back into the property later depends on your unique circumstances.

Yes, property can be transferred by gift or to family without a sale.

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