Diritto immobiliareWhat to keep in mind when transferring Queensland property to family members

If you are thinking of transferring property to a family member, you might want to keep the following in mind.

• The process for transferring property to a family member;
• Whether transfer duty is payable on the transfer; and
• whether Capital Gains Tax (CGT) is appliable.

1. The process of transferring property to family members.

There are two common ways to transfer property to a family member: either gifting or selling.

Gifting the property

In the event you wish to ‘gift’ the property, it is recommended that a professional valuer is engaged to prepare and provide a valuation report of your property in accordance with the Queensland Office of State Revenue requirements. The valuation can be done by a registered valuer or a real estate agent who is independent of the valuation and competent to assess the value of the property and provide comparable sales to support their opinion. The valuation is required for transfer duty purposes as the transfer duty will be calculated on the valuation amount of the property.

Following this, the necessary Queensland Land Title transfer form 1 and 24 are required to be completed along with a formal agreement setting out the terms of the transfer and clarifying the gifting process.

Be aware of any fees outstanding associated with the property in order to ensure this is paid at settlement. This includes the water and rates payable on the property.

Selling the property

Your solicitor will be able to assist you with all stages of preparing, negotiating, signing and settling your conveyancing matter. In addition, your solicitor will be able to assist in engaging a valuation of the property as this is required to satisfy the transfer duty requirements.

2. Is transfer duty payable?

 

Transfer duty (also known as stamp duty) is a tax on the transfer of property. Transfer duty is payable regardless of whether the property is purchased for market value or is a gift from a family member.

Transfer duty is usually payable by the buyer and it is usually calculated by reference to the market value.

Concessions to the transfer duty may be applicable if the buyer satisfies the Office of State Revenue requirements. Some of the exemptions are as follows:

1. Transferring an interest to your spouse.

Transfer duty is not applicable if the original owner is:

• transferring half their share of the property to their spouse by way of gift;
• the property will be their main principal residence; and
• both the original owner and their spouse will hold the property either as ‘joint tenants’ or ‘tenants in common in equal shares’.

1. First home concession

If the buyer acquires the property, they may be eligible for a first home concession if:

• They have never claimed a first home concession;
• They have never held an interest in another residence anywhere in Australia or overseas;
• They are 18 years of age;
• They move into the dwelling with their personal belongings and live there within 1 year of settlement;
• They do not sell, transfer, lease or grant exclusive possession of all or part of the property before they move in; and
• The market value of the property is valued is less than $550,000.

The Buyer must also satisfy the other Office of State Revenue requirements if they wish to claim the concession.

1. Home Concession

The buyer may claim a home concession if they satisfy the following:

• move into the dwelling with their personal belongings and live there on a daily basis within 1 year of settlement; and
• not sell, transfer, lease or otherwise grant exclusive possession of all or part of the property before they move in.

1. Family business concession

The buyer may be eligible for a transfer duty concession if they are acquiring business property from a family member with the intention of running the business.

The concession is available for:

• Primary production business; and
• Prescribed businesses.

In order to claim a primary production concession, the following must occur:

• The business must be of primary production of agriculture, pasturage or dairy farming;
• The business must be acquired directly from a relative.

To claim a prescribed business concession, the buyer must acquire the business property from either their or their spouse’s parent or grandparent.

However, the buyer will not be eligible to the concession if they are acting as trustee or as an agent or nominee of another person.

 

3. Is Capital Gains Tax payable?

CGT may be payable by the original owner of the property. The CGT cost is based on the market value of the property. You can calculate your CGT based on the market value if both of the following are correct:

1. what you received was more or less than the market value of the property;
2. you and the new owner were not dealing with each other at ‘arms length’.

To be considered an ‘arms length’ agreement, each party must act independently in the transaction.

If the property was the original owner’s main residence, they can claim the main residence exemption from CGT.

If you have any queries, please contact Stephanie Tran on (07) 3839 8011.