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property transfer
Tuesday, Feb 20, 2024

How To Transfer Property Title Between Family Members?

Written by westadmin

There is a unique significance in transferring property titles within a family in the real estate industry. To help you successfully manage the process of transferring property between family members in Australia, this article delves into the ins and outs of the subject.

This article discusses several options for passing property titles from one generation to the next.

By the time you finish reading, you will have a solid grasp of the intricacies involved in selling property, giving property as a gift, and transferring ownership within your family.

What is the transfer of property & property title?

A deed or property title is a legal document that transfers ownership of a piece of property to another party. It specifies the persons or entities with the legal right to own the property and spells out their duties and rights about it. Legally, one party can transfer ownership rights to another by transferring property title.

Identify the three components of a property transfer.

There are three essential components to property transfers:

  • Negotiation & Agreement - At this point, family members meet to negotiate the specifics of the transfer and come to an agreement. Valuation, transfer mechanisms, and any monetary factors are all agreed upon.
  • Paperwork - Paperwork and Processing: All necessary legal documents, such as the transfer deed and any applicable paperwork, are meticulously created and sent to the proper authorities. Ensuring the correct documentation of the legal details of the transfer is the purpose of this phase.
  • Finalisation & settlement - After the paperwork is in place, the settlement process may begin. This includes the transfer of money, the transfer of ownership of the property, and the completion of any relevant legal documents. At this point, the transfer is enforceable under the law.

How to transfer property title?

1. Sale Contract

You should seek an attorney for assistance with this matter because it is a legal document. Any property in an urban area of Victoria must follow this process.

  • Property deeds
  • Renewed zoning permit
  • Property limitations
  • Drainage plans
  • If relevant, a certificate for a swimming pool

Despite how daunting these prerequisites seem, you should not be concerned. With your conveyancer's assistance, filling out the paperwork will be a breeze.

2. Sign the Sale Contract

Each party to the contract in a transfer of property title to a family member—the seller, the buyer, and their respective attorneys—must sign it. Always have an extra duplicate of the signed paper on hand. It is common practice for the seller to sign the paperwork before sending it to the buyer.

The buyer typically puts down 0.25 percent of the transaction price in a conventional deal.

However, family members involved in the transaction might work out a local payment arrangement.

3. Start the Cooling-Off Run

There is a legal "cooling-off" time of five business days for buyers in Victoria to reconsider their purchase. The buyer has the option to terminate the deal within the cooling-off period but will lose 0.25 percent of the purchase price.

The remaining portion of the deposit, which is 10% of the purchase price, is due after this time. Keep in mind that the buyer is the intended beneficiary of the cooling-off period. Once a seller signs a contract, they are legally unable to back out.

4. Finish the Procedure at the Land Office

Part of the procedure is filling out necessary forms like Transfer of Land Form T1. Get assistance from your lawyer to complete these forms. The deed to the property must also be submitted.

5. Cover the Costs of Taxes and Transfers

You must pay stamp duty and capital gains taxes before the government can transfer ownership of your property to a family member when transferring the house title.

The capital gains tax you must pay depends on the profit or loss your property incurs. Your income determines the taxed amount.

The market price, and not the contract price, will determine its value, so keep that in mind.

6. An opportunity to evade taxation exists if:

  • You will not get the full amount that it is worth on the market.
  • In a sale, you aren't doing business at a distance.
  • The buyer's principal dwelling constitutes the asset.

Will the transfer require me to pay capital gains tax and/or stamp duty?

Regardless of whether they're receiving the property as a gift or buying it from a family member, the individual must still pay stamp duty.

Visit the State Revenue of Victoria's website for further details on this. A few examples of these situations may be:

  • If you are a beneficiary receiving property from a deceased estate
  • If the property is being transferred between a married couple or de facto couple that has been cohabiting for more than two years
  • If a relationship ends and assets are divided or settled
  • If someone gives the property to the trustee of a special disability trust without payment.

Stamp duty will be determined based on the property's market value at the time of transfer. It won't be based on the amount it sold for, should you sell it to a family member at a price below market value (for instance, from a parent to a child).

What expenses does transferring property title to a family member entail?

The following are some instances of fees and levies that might be incurred when transferring property to a family:

  • Expenses that the initial owner covered

Before transferring home title to a family member, you might need to have the value assessed by a certified valuer. This is so that when you file your income taxes, you will know how much you have gained or lost. Depending on the location of the property, independent appraisals might cost anywhere from $300 to $900.

  • Costs for legal services

A conveyancer or solicitor should supervise the property transfer and draft contracts or other transfer paperwork that includes title information, the property's estimated worth and purchase price, and the parties' personal information. If the legality of the property transfer is contested, certain legal documents can be employed.

  • Tax on capital gains (CGT)

The amount of capital gain or loss arising from the CGT event will determine the CGT cost. If you have a capital gain, the difference between your capital proceeds and the asset's cost base will be your overall gain.

Since CGT applies to your income tax for the relevant year, your income will determine the exact amount you pay.

  • Expenses covered by the new owner & coin stamp obligation

stamp duty land tax depends on the value of the land or property being transferred. This value determines the tax amount. Contact the office of revenue in your state or territory to find out if any purchases are exempt from stamp duty. The state or territory you are in determines how much stamp duty you will pay.

At Westgate Conveyancing, we help you with every aspect through this article. You will no longer need additional help if we are a part of your conveyancing process. Contact us today!!