Can you transfer a property to a family member for free?

Even if you’re gifting a home to a family member rather than selling it, there may still be plenty of fees and charges involved. You may choose to include in your arrangement to transfer the property that the new owner will pay these fees and charges, but it still helps to understand what they are.  

Some of these charges could include: 

Stamp duty

Depending on the market value of the property and the state or territory it’s located, the new owner may be charged stamp duty even without a sale.

Title transfer fees

When transferring property ownership between two parties, you need to change names on the property title held by the government. Transferring this title comes with fees that will be based on the market value of the property.

Capital gains tax (CGT)

Even without any money changing hands, there may still be CGT charged based on the change in the market value of the property. This will depend on the property purpose, as most states and territories don’t charge CGT on primary residence properties their owners have lived in.

Mortgage and mortgage transfer fees

If there is still an outstanding mortgage on the property, you’ll need to work out who is responsible for paying this down. If the new owner agrees to take this on, their name will need to be added to the mortgage, which could come with fees. 

Conveyancer or other professional fees

You may choose to engage the services of a conveyancer to assist with the transfer, which means paying their fees. You may also want to use a solicitor or financial advisor to help process the transfer and help with the financial aspects, all of which will charge fees.  

You’ll want to discuss with the family member taking over ownership how all these fees and charges will be split and who will pay what before starting the process.

There may be some circumstances where you’re exempt from some of the costs that come with transferring the property title. One such exemption could be based on the age of the property and the state you live in. Some circumstances mean you may be able to get an exemption on either the CGT or the stamp duty. For instance, transferring a property that is considered your primary residence and you’ve been living in won’t usually incur CGT, but you may need documentation to prove your residence, such as recent utility bills. Also, if you purchased the property before 20 September 1985, you may not need to pay CGT when you transfer the property. However, if you made any structural improvements to the property that increased its market value, you may still need to pay CGT. 

If you’re transferring a property you purchased - and lived in - to your partner to comply with a formal divorce or court order, neither of you would need to pay CGT, even if they eventually sell the property. In such circumstances, you may also qualify for a stamp duty exemption if your state or territory allows it. For instance, in Western Australia, only a nominal stamp duty - called transfer duty - of $20 is charged when one spouse or de facto partner transfers their residential property to the other partner. 

 Although these circumstances may allow for exemptions on some of the costs of transferring a property to a family member, there may still be other costs you’re not exempt from. Ensure you research, understand the total costs involved, and even seek professional advice before processing the transfer.