It is quite common for 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 a 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 will not be entered into so in these situations, how is the property actually transferred? In this blog we explain the process and potential costs involved.
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 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.’ This document is signed by both parties. There is a filing fee for lodging the Transfer which is currently $141.60.
When lodging the Transfer with the LRS the Certificate of Title is also needed. This is because the Certificate of Title is the official record of ownership of land. If there is no mortgage on the property this Certificate is generally held by the owner or their solicitor. If the property has a mortgage the Certificate of Title is held by the bank. Once the Transfer is registered the new owner is listed on the Certificate of Title. A new Certificate of Title is issued to the new owner.
If there is a mortgage on the property the bank will need to consent to the transfer being made. If the bank does consent, the bank will produce the Certificate of Title to the LRS so that the Transfer can be lodged. The bank will charge a fee for doing this. Fees vary considerably between the different banks. Alternatively, it may be part of a refinance and the Certificate of Title will be produced at the settlement of the new loan. The bank’s fee is generally then included in the new loan.
Transfer of Property and 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. Revenue NSW has a calculator to assist in working out stamp duty payable. 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 and 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 an financial agreement is shown.
Additional forms need to be completed to claim either exemption.
Sharpe Legal and Conveyancing are able to assist with the transfer of property to family members. Contact us today to find out how we can help you on (02) 4605 1501.
The contents 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.