We’ve all heard those family-splitting scenarios that unfortunately occur when the words ‘assets’, ‘inheritance’, and ‘family’ combine.
Standard buying and selling property matters are often harrowing enough, even with a team of experts in your corner.
But how does one go about simply 'giving' property to a child, sibling, or other family members?
Let’s look at how to transfer a property between family members and what to weigh up before executing such an exchange.
In a nutshell, yes. However, a realm of personal circumstances would dictate how, when and to whom it plays out.
It’s entirely possible, and might I add a quite common process. Family dynamics are often rather complex, providing plenty of valid reasons for title reassignments.
However, how to transfer a property title between family members is only one factor in an often tedious, multi-element process.
But much of how to smoothen it stems from understanding why you wish to conveyance the property in the first place, with our next section detailing why people consider it.
Whilst it’s not all doom and gloom, a seemingly effortless ownership transfer could prove challenging.
Many property owners naturally want peace of mind knowing their inheritance is secured early, while others have more complicated reasons.
Here are the four most common grounds or motives for those researching how to transfer a property title between family members:
In Australia, our tax man demands a fair bit.
It’s almost customary for homeowners to seek ways to pocket a little more of that hard-earned where possible. Offloading a title may well be enough to warrant the extra profits.
To help a child, parent, sibling, or other family member get a start in the property market or just for a heftier financial backing for a rainy day.
Seniors or older parents often prefer finalising inheritances before relocating abroad to retire or in accordance with health concerns.
Spousal issues or family disagreements sometimes influence a homeowner’s decision to make assets inaccessible to certain people or parties.
Remember, property transfers or mortgage customisations almost always incur fees. Think about these four critical points prior to making any final decisions:
Who will your assets go to after you pass? Do you risk a contest and negatively affect loved ones left behind by changing an original course of inheritance?
It’s only human to want to minimise these while maximising deductions. Consult your accountant for a more guided opinion on whether transferring a property title will benefit you or make you wish you hadn’t bothered.
Evaluating your options long and hard as to who receives the assets could mean the difference between a well-executed plan and a family-dividing nightmare.
Trust must be prioritised when essentially ‘handing over’ something substantially valuable, even if it’s a close family member.
Also, would they potentially be placed into legal peril should anti-avoidance rules apply in your state?
These two reasons are why most of the emphasis lands on the ‘who’ aspect regarding property title transfer matters.
Where you plan to spend those golden years, with whom, and with how much will likely determine how and when property assets are shared. Market research might suggest holding onto a particular property for a few more years, while a nearing forecasted downturn could force a decision.
Three primary methods allow homeowners to make the transfer between family members; gifting, selling, or restructuring the ownership share.
Each way is associated with several pros and cons. However, all circumstances and reasons for title transfers differ wildly, varying these options’ degree of appeal.
While gifting states that a property has been given to someone for free, both owner and recipient won’t exactly avoid paying fees altogether.
Although supposedly a gift and some exemptions may apply, recipients of ‘free’ properties could still have to pay the land tax on the transfer.
However, whether the transferer was occupying or renting out the property will determine if they’re subject to a capital gains tax payment.
An ordinary contract of sale is another way to exchange ownerships for (technically) a zero-dollar price tag.
Normal sale procedures will be required, including likely paying stamp duty upon receipt of new ownership. Like with gifting, the seller may also need to pay capital gains tax on the sale.
Keep in mind stamp duty is likely to end up in the thousands, if not tens of thousands of dollars. You’ll need to consider all your recipients’ financial capabilities and if they’ll even agree to accept the transfer.
Properties can also be secured in a family trust or super trust. However, more complex regulations and processes may apply.
Where family members jointly own a property, this option can be as straightforward as revising and altering the ownership shares legally.
Some Australian states require lawyers to make these changes, whereas others permit conveyancers to manage such matters.
Modifying ownership percentages is by far the quickest and most convenient way to transfer property titles. However, it’ll only work where the nominee already owns part of the property, to begin with.
Property title transfers should never be a spontaneous decision.
Carefully consider what’s realistically involved, along with the potential consequences of this newly nominated family member accepting your assets.
Family structures and circumstances differ unfathomably, and property title transfer, the experts nor the industry have any kind of “one size fits all” solution.
Discussing desires openly with your family allows all parties involved an opportunity to better comprehend your wishes and their purposes. This way, you’re bound to receive the most positive and supportive response possible!