Transferring property in Australia to a family member or adding them to a property title can be a smart financial move to protect wealth, pass on an inheritance, or help loved ones enter the property market. But understanding the tax implications of land transfer duty is essential before you make any decisions.
Our estate planning accountants specialise in guiding families through complex property transactions to ensure they’re handled as smoothly and tax-effectively as possible. In this guide, we’ll explain what land transfer duty is, when it applies to family transfers, and how you might qualify for valuable exemptions. With our expertise, you can feel confident about making the right choices for your family’s future.
Book a chat with Liston Newton today to learn how we can help you navigate land transfer duty and minimise your tax burden.
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But first, what is land transfer duty?
Land transfer duty is a one-off government tax you pay when you buy, sell, or transfer property. This tax applies whenever a property title changes hands — whether through a new contract, gifting a share of the property, or adding another property owner to the title.
It covers all types of property, including family homes, investment properties, business premises, and holiday homes. The amount you pay depends on factors like the property’s value, location, how you use it, and whether it’s your primary residence.
To determine the duty owed, an official valuation of the property is typically conducted to assess its market value. The tax is then calculated on the higher of two figures: the price you paid for the property or its market value. This figure is known as your property’s dutiable value.
Since each state and territory manages its own property titles, land transfer duty rates vary across Australia. Depending on your location, you could be looking at anything from a few thousand dollars to tens of thousands in tax. It’s essential to check your State Revenue Office’s rules to understand how much land transfer duty applies to your transfer.
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It’s important to note that land transfer duty is separate from land tax, which is a recurring tax paid on property you own. However, certain property transfers can also impact your land tax obligations.
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What’s the difference between land transfer duty and stamp duty?
If land transfer duty and stamp duty on your property sound awfully similar, that’s because they are. Land transfer duty and stamp duty are simply different names for the same fee, and they’re referred to by different names depending on the state or territory you’re in.
State governments levy stamp duty on all property transactions, whether transferring property to family members, selling to unrelated parties, or changing ownership proportions.
Do you pay land transfer tax when transferring property to a family member?
Yes, you generally have to pay land transfer tax when transferring property to a family member. The same State Government rules apply when transferring property to an external party. So, whether you’re buying, selling, or gifting property to a family member, land transfer duty usually applies.
However, some exemptions and concessions are available, which we’ll discuss in a moment.
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You generally need to pay stamp duty on all property deeds unless a specific exemption applies, such as when transferring property between spouses or as part of a deceased estate.
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Common ways to transfer property between relatives
Selling and gifting property are the two most common ways of transferring the property between relatives.
Gifting property to another family member
Gifting property to another family member is the most common method of transfer. It can occur from parents to children, between spouses, or a myriad of other ways. It’s important to be aware that when transferred in this way, if the property hasn’t been your primary place of residence, a capital gain event may occur. Therefore, even if the property is transferred as a gift, the market value is still used to assess land transfer duty and you may still be required to pay CGT.
Selling property to another family member
When you sell the property to a family member, it’s treated like a standard property sale. Even if the property is sold at a reduced rate, the land transfer duty is still assessed against the market value. The only difference is that the selling family member may be offering the property at a reduced rate. In this circumstance, though, the land transfer duty is still assessed against the property’s market value — and so is capital gains tax. The reduced sale rate doesn’t have an impact on the taxes charged.
Changing ownership proportions on the title
This occurs when owners add another family member to the title, or they change their proportion of ownership. This can help to reduce the individual’s taxable income on the property, and can also help to create a level of distance between the asset and each owner.
For all these transfer methods, as well as CGT events and land transfer duty, there may also be pension impacts for older family members. The transfer of a property is assessed on the property’s market value, and if you have a pension, this is considered as generating income. Even if money isn’t actually paid for the property, the market value of the property is added to a person’s pension assets test. This can end up reducing the amount of pension you’re able to receive. Get in touch with our pension planning advisors for personal advice.
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Changing ownership proportions can also impact your taxable income if you derive income from a transfer, especially if the property is used for investment purposes.
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Exemptions to paying land transfer duty
In some circumstances it may be possible to transfer property without paying stamp duty, as there are some exemptions to paying land transfer duty between family members. Whether you qualify for an exemption depends on how you held the property at the time of the transfer, including factors like ownership structure and how the property was used.
We’ve broken these stamp duty exemptions down state by state. Please note, though, that this is not an exhaustive list. There may be specific exemptions based on your current situation, so it's best to check with your local state or territory to understand more about your land transfer duty obligations.
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Keen to learn more about how a property tax deduction works?
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Victoria
Land transfer fees in Victoria may not apply when related to the transfer of a family home between married or de facto couples. This includes as part of divorce proceedings, or related to deceased estates.
New South Wales
Married or de facto couples may not need to pay land transfer duty if the property is their primary place of residence. They may also be exempt if the transfer is part of divorce or relationship breakdown proceedings.
Queensland
Married couples who transfer property between themselves can receive an exemption from land transfer duty, both in a relationship and as part of breakup proceedings.
ACT
Couples can be exempt from land transfer duty payments if the transfer is between each other for their primary place of residence. They can also receive an exemption if the transfer is related to relationship breakdown, deceased estates, or as part of a will. An interesting rule here is for farmers: they may be able to receive an exemption if they’re transferring primary production land to another generation of the family.
Tasmania
Tasmanian married or de facto partners may be exempt from land transfer duty when transferring property from one partner to the other. However, transferring from both partners into just one partner’s name does not receive an exemption.
South Australia
South Australia has the tightest land transfer duty rules. As such, land transfer duty exemptions in SA are only available as the result of a deceased estate transfer, or on property deemed ‘qualifying land.’ This covers industrial, commercial, mining, or recreation land.
Northern Territory
Married or de facto partners are generally able to receive a land transfer duty exemption when transferring between themselves, either as part of the relationship or upon relationship breakdown. Similar to the ACT rules, farmers may also receive an exemption when transferring primary production land between family members.
Western Australia
Western Australians can only receive a land transfer duty exemption if the transfer of a title is for a family farm, or it’s between married or de facto partners. Both parties must be the sole joint tenants with equal share in the title. A minor exemption is available upon the breakdown of a relationship or as part of a deceased estate — an insulting $20 fee.
Frequently asked questions about property transfers
We understand that transferring property within your family can be confusing, especially when taxes and the legal aspects of the transfer are involved. Here are some of the most common questions we hear from clients, along with practical advice based on our expertise.
Can you transfer property to a child in Australia without paying tax?
No, you generally can’t transfer property to a child in Australia without paying tax. If the property isn’t your primary residence, you may be required to pay capital gains tax, and land transfer duty often applies unless you qualify for a specific exemption.
However, exemptions may apply if the transfer is part of a deceased estate or a valid family trust arrangement. Each state has its own rules, so it’s essential to check the regulations where your property is located. If you’re considering transferring property to a child, we can help you structure the transfer for better tax minimisation.
Can you transfer property without paying stamp duty?
Yes, you can transfer property without paying stamp duty in certain circumstances, but these are limited. Stamp duty exemptions may apply if the transfer is between spouses due to divorce, death, or as part of a valid will.
The rules around stamp duty exemptions vary by state, and the process often requires precise documentation to be completed accurately. It’s important to seek professional advice to ensure your transfer qualifies for an exemption and you avoid unexpected tax bills. We can guide you through the process to identify your best options.
How do you transfer property ownership to a spouse?
To transfer property ownership to a spouse, you need to complete a property title transfer, which involves submitting the necessary forms and documentation to your state’s land registry office.
Transfers between spouses are often exempt from stamp duty, especially if they’re related to divorce settlements or deceased estates. However, the rules can be complex, and it’s essential to ensure all legal requirements are met to avoid unexpected tax implications. We can walk you through the process and help you complete everything correctly.
What documents are needed to transfer a property title?
To transfer a property title, you typically need:
- Proof of identity for all parties involved.
- A completed transfer of property form specific to your state or territory.
- Proof of payment or exemption from land transfer duty.
- Documents related to the transfer of mortgage, if applicable.
Requirements can vary depending on the type of transfer and your location. We can help you navigate the paperwork to make sure everything is handled correctly and efficiently.
Is there stamp duty on inherited property?
Yes, stamp duty can apply to inherited property, but it depends on your state’s regulations. When property is passed down as inheritance, exemptions may apply if it’s transferred through a valid will or as part of a deceased estate transfer. In some states, you can avoid stamp duty if the property is passed down through a valid will or as part of a deceased estate transfer.
If the transfer doesn’t meet these criteria, you may still have to pay stamp duty. It’s important to understand how your state’s rules apply to your situation and ensure you meet the necessary requirements to qualify for an exemption. Our estate planning experts can help you determine if you’re eligible and guide you through the process.
How do you transfer property from a family trust to an individual?
To transfer property from a family trust to an individual, you need to complete the relevant documentation and meet all legal requirements specific to your state.
Transferring property from a trust often triggers capital gains tax, and in some cases, stamp duty may also apply. This process can be complex, especially if the trust has been established for estate planning or asset protection purposes. We can help you navigate the requirements to ensure your transfer is done correctly and with minimal tax impact.
Can you sell a house to a family member in Australia?
Yes, you can transfer ownership of the property between family members in Australia, but it’s treated as a standard sale for tax purposes. Land transfer duty is calculated based on the property’s market value, even if you sell it for less than it’s worth.
If the property is not your primary residence, you may also be liable for capital gains tax. Related party transfers can be complex, especially when it comes to determining the correct market value and ensuring compliance with tax regulations. We’ve helped many clients successfully conduct the sale of the property to family or friends while minimising tax liabilities, and our estate accountants can help you, too, if you’re planning on selling or gifting property to your children.
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Free property transfer strategy session*
Get expert guidance to navigate property transfers within your family and minimise your tax burden.
- Understand how land transfer duty, capital gains tax, and exemptions apply to your situation.
- Receive a tailored report with actionable steps to reduce your tax liabilities.
- Gain clarity on your next steps to ensure a smooth and tax-effective property transfer.
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The final word
Helping your children get on the property ladder by transferring property to them can be a smart financial move, but it’s not without its complexities. From navigating land transfer duty to understanding potential capital gains tax implications, there are plenty of pitfalls to avoid.
Preparedness is everything. At Liston Newton Advisory, we specialise in guiding families through property transfers to ensure everything is handled smoothly, tax-effectively, and in a way that benefits your loved ones. Whether you're gifting a property, selling it at a reduced rate, or adding a child to the title, we can help you structure the transfer to minimise costs and avoid unwanted tax surprises.
