How to transfer a property title between family members
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Most people understand the process of selling a house, but transferring a property title between family members is a different thing altogether.

There are many reasons for doing it, and it involves a number of legal requirements and tax obligations. But the rules vary from state to state, so legal advice is key.

transferring family titles

Can you transfer property title between family members?

Meldon D’Cruz, principal at Cruz Legal in Melbourne, says it’s possible to transfer property titles between family members, but it requires careful consideration.

He says owners transfer properties for many reasons, but the main drivers are:

  • tax considerations
  • helping a family member, such as a child, to get a foothold in the property market
  • to ensure a family member receives their future inheritance early
  • asset protection – for example, transferring ownership of the family home away from a spouse who is on the brink of bankruptcy or likely to get sued.

Transfers are usually done via gifting, through a lawyer, but it’s also possible to sell a property to a family member. If a property is jointly owned, a change can be made to the ownership split. Such transfers or mortgage changes incur fees.

According to D’Cruz, different tax considerations apply depending on the state or territory in which the property is located, on whether the property is residential or commercial property, and on how many properties the involved parties own.

Each case is different, so those thinking about transferring a property need to get legal advice. Some people will end up paying more tax, such as capital gains, some less. It all depends on the specific circumstances of the people at both ends of the transaction.

16 Neptune Street, St Kilda

What to consider before transferring property title to a family member

There is a lot to consider when contemplating transferring property titles between family members.

Before transferring, people need to consider the following:

  1. Tax benefits
  2. Tax liabilities.
  3. Capital gains tax.
  4. Asset protection.
  5. Estate planning.
  6. Retirement plans.

D’Cruz adds that those transferring property should also be aware of the anti-avoidance rules in their state or territory.

“Where someone is being sued and they transfer the family home into the spouse’s name, there are what’s called claw back provisions, or anti-avoidance measures, where people can say you’re disposing of your assets so you don’t have to pay out on a lawsuit and challenge it. That’s something to be aware of,” he says.

How to transfer property title between family members

D’Cruz says there are three main ways to transfer property title between family members.

  1. Gifting.
  2. Selling.
  3. Changing ownership share.

1. Gifting

Gifting is where a property is transferred without paying any money – the same as giving a birthday present to a friend, D’Cruz explains.

Unless an exemption applies, the recipient may still need to pay land tax when they take ownership of the property, and the person gifting or transferring the property may have to pay capital gains tax – depending on whether it was an investment property or their primary residence.

D’Cruz says some exemptions apply depending on the state or territory in which the transfer occurs. For example, owners can sometimes transfer their interest in a property to their spouse without needing to pay stamp duty, but there are strict requirements around this, he says.

family home

2. Selling

It’s possible to simply sell a property to transfer its ownership, which is documented with a contract of sale of land, D’Cruz says.

As with any sale of land, the purchaser normally has to pay stamp duty, and depending on the type of property, the person selling may have to pay capital gains tax, D’Cruz explains.

Sometimes, a property can be held in a family trust or through a superannuation trust, but strict rules apply.

3. Changing ownership share

If family members jointly own property, the ownership split can be changed on the title.

D’Cruz says a lawyer or conveyancer will prepare all the relevant documents and lodge these with the relevant state authorities, such as the land titles office. In some states, such as Queensland, only a lawyer can do this, but in Victoria, a conveyancer can.

 

Reference:- www.realestate.com.au

 

For any real estate need either Buying or Selling or Investing , contact me either via email or phone given below.

 

0416 737 593

 

sanjay@propertyhubgc.com.au

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