It is quite common for the transfer of property to occur between family members. A wife wants to transfer property owned in her name to her husband to be owned jointly. Parents may want to sell property to their son or daughter. Other people may want to remove an owner from the title where a property was purchased together. Often a Contract of Sale of Land will not be entered into so in these situations, how is the property actually transferred?
Transfer of Property to Family
The first document that is needed is a Transfer form. The Transfer is the official legal document that gets lodged with the NSW Land Registry Services (LRS) to record the transfer of ownership. In the Transfer document the current owner of the property is called the ‘Transferor’ and the person receiving the property is the ‘Transferee’. Once the Transfer is registered the new owner is listed on the title of the property.
If there is a mortgage on the property then the bank will need to consent to the transfer being made. If the bank does consent, then the bank will produce the Certificate of Title to LRS so that the Transfer can be lodged. The bank will usually charge a fee for doing this.
Transfer of Property & Stamp Duty
All transfer documents are required to be stamped and duty paid to Revenue NSW (formerly the Office of State Revenue). Stamp duty is paid on the market value of the property or the agreed purchase price, whatever is higher. Because the parties are related Revenue NSW requires an independent valuation to determine the market value of the property.
Stamp duty is calculated based on the independent valuation. We will then be able to determine the exact amount of stamp duty that is applicable. Stamp duty is only paid on the share of property being transferred. For example, a property is valued at $500,000 and is owned by a brother and sister in equal shares. The brother is transferring his share of the property to his sister. The half share is worth $250,000. The stamp duty payable is calculated on $250,000.
The Transfer document needs to be stamped and duty paid before the Transfer document is lodged with the LRS.
Transfer of Property & Exemptions from Stamp Duty
There are exemptions from the payment of stamp duty when transfer of property occurs between family members.
Firstly, an exemption is available where the matrimonial home is being transferred between married couples or de facto partners. This exemption is only available where the property is the matrimonial home. The exemption is not available for investment properties.
An exemption is also available where property is being transferred following the breakdown of a marriage or de facto relationship. The exemption is available where Court Orders or a Financial Binding Agreement is provided.
Additional forms need to be completed to claim either exemption.
Contact us to discuss the transfer of your specific property!
Disclaimer: The content of this publication is for reference purposes only and should not be relied upon as legal advice. Specific legal advice should always be sought to take into account your individual circumstances.