Transfer of property ownership between related parties
16 July 2025 in Property and Conveyancing Law | 6 min read | skip to FAQsThis article discusses the transfer of property between related parties. If you qualify it can be a more cost effective and efficient method of transferring property. However, there are important legal and financial consequences to consider which may make it a less than attractive option.
Who is a related party?
A related party for the purpose of the transfer of property ownership can include spouses, children, grandchildren, other family members or people in a business or personal relationship with the current owner of the property. In certain circumstances and where the property transfer is properly structured the transfer may be exempt from stamp duty, now called transfer duty in NSW, for instance when:
- A property settlement is the result of a divorce or de facto separation.
- A deceased estate when a property is transferred to a beneficiary.
- A transfer between spouses when one spouse is added to the title.
- A transfer to correct an error or fraudulent transaction.
What are the benefits of transfer of property ownership to a related party?
In previously mentioned circumstances the transfer of property ownership to a related party is exempt from stamp or transfer duty, pursuant to Part 7 of the Duties Act 1997 (NSW). It is important to seek legal advice so that the transfer is legally structured to ensure that this exemption from stamp duty is achieved. The property lawyers at BSM Sydney Lawyer can assist with this.
Is Stamp duty paid if the transfer is a gift to a related party?
Stamp duty, is generally required for related party transfers of property, regardless if the property is a gift. If the property is being transferred as a gift or below the market value, a valuation report from a registered property valuer is necessary. The stamp duty payable is based upon the market value of the property stated by this report and the share of the property which is transferred.
Exemptions and Concessions to Transfer Duty
Transfer between married couples and de-facto partners
There is no stamp duty payable in the transfer of a residential property between a married couple or de-facto partners and the transferred property is either the family home (principal place of residence) or vacant land which is intended to be used as the site of a family home.
Foreign transferees
If a person eligible for the exemption of transfer duty is a foreign person, the person is still obliged to pay a surcharge purchaser duty of 8% of the value of the transferred property. A foreign person is generally a person or company who is not ordinarily a resident in Australia and who is not an Australian citizen.
What happens if the Family home is used for Business?
If the family home which is exempt from stamp duty is also used for other purposes, only the part of the house which is used as a residence will be eligible. If the use related to a business or undertaking which is primarily conducted elsewhere and uses no more than one room for the non-residential purpose, the full exemption is still available.
What happens when there is a relationship breakdown?
After a divorce or de-facto relationship, or a domestic relationship breakdown, a transfer of any share of the matrimonial home made pursuant to section 90B, C, or D of the Family Law Act 1975 (Cth) will be exempt from stamp duty. A domestic relationship is where two adults live together with each other to provide care and domestic support but are not married. Matrimonial property is property which is owned by both parties in a marriage or property which is owned by either of them.
The property must be transferred to either of the partners in the relationship, the child or children of either partner or a trustee for the child or children of either partner to be eligible of the exemption.
Other Considerations when transferring property
Costs
While certain circumstances may allow certain costs to be mitigated, such as the lack of need for a contract for sale or the costs of any lawyer’s fees, there are still lodgement fees, title registration and bank fees which need to be considered before proceeding with the transfer of property ownership to a related party.
Tax
Capital gains tax, GST and other tax implications may arise due to the transfer of property to a related party.
Mortgage
If a property is transferred to a related party, any existing mortgage on the title will need to be discharged. This will generally require that the mortgagee is notified of the potential transaction and a discharge of mortgage and a refinance is arranged.
How can BSM Sydney Lawyers assist you?
The property and conveyancing lawyers at BSM Lawyer Sydney are experts in the legal implications of the transfer of property. Our team of property lawyers understand the legal complexities involved in the transfer of property to a related party. Our helpful Sydney lawyers can advise you if the transfer of property to a related party is a cost effective and efficient method for your particular circumstances. Our expert lawyers will draft the necessary contracts and documents in a way that reflects your wishes and is legally binding and thus less likely to be challenged.
At Brander Smith McKnight Sydney Lawyers, all property transfers and conveyancing is conducted entirely by lawyers, we do not use conveyancers. We offer a very competitive fixed fee for conveyancing. Our lawyers understand the anxiety and stress that property matters can cause and work diligently to alleviate the stress by keeping you well informed and explaining legal concepts and processes to you in clear and simple english.
The property lawyers at BSM offer a free 20-minute consultation to discuss your individual case
Call us to arrange a free 20 minute no obligation consultation that includes case evaluation and cost estimate.
FAQs
Should I have a lawyer draft my transfer of property ownership to a related party?
In a related party transfer of property is a Contract for sale required?
While a Contract for Sale is generally required for the transfer of a property, in certain circumstances, such as when the ownership of the property is to be transferred due to a court order, a Transfer document may be sufficient. Money and time can be saved for all parties involved if the transfer of the property can be completed without a Contract for Sale. The property lawyers at BSM Lawyer Sydney will advise you if this applies to your particular case and draft the relevant documents.
What is a property title?
When a property is bought or sold, the change of the ownership needs to be recorded by the government. This is known as the property title. Each state and territory maintains their own registry of these titles.
Are you able to gift a house to another person in New South Wales?
You are able to gift a house to a family member, friend or another person. Stamp duty (now known as Transfer duty in NSW) would generally still be payable on the market value of the property rather than any financial payment which was provided for the transfer of the property. The property legal team at BSM Sydney Lawyer can advise you.
When is market value used to calculate the capital gains tax?
The market value of the property is used to calculate the capital gains tax related to the property when the property was received for an amount greater or less than the market value of the property. In addition, when there is a suspicion that the parties were not dealing with each other at ‘arm’s length’.
What is dealing at ‘arm’s length’?
Deal at ‘arm’s length’ is when each party acts independently and neither party exercises influence or control over the other in connection with the transaction.
What are the benefits of transferring property to family members?
The benefits in transferring property to family members include helping a family member get a foothold in the property market and ensuring that a family member receives their future inheritance in a timely fashion.
Does the main residence exemption from capital gains tax apply in the transfer of property between related persons?
Yes, so long as you are eligible for the main residence exemption from capital gains tax the transfer between related persons will not affect the eligibility to this right. For more information contact our Sydney lawyers for a free 20-minute consultation.
Do you have to pay fees when you gift a property to a family member?
Yes, there is still paperwork processing fees, legal fees and valuation costs as well as stamp duty (now known as transfer duty in NSW) and capital gains tax tied to the property unless there are exemptions available. The property lawyers at BSM Lawyer Sydney can assist you.
Does the transfer of property between related parties affect the first home buyer duty concessions?
The State Revenue Office is of the position that the purchaser must have paid market value to be eligible for the stamp duty concessions, meaning that if the buyer has paid less than market value, the buyer is not eligible for the first home buyer stamp duty grant or concession.
BSM Lawyer Sydney has offices conveniently located in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.
About the Author
Lachlan TaxBachelor of Laws I Bachelor of Commerce with a major in Economics I Graduate Diploma of Legal Practice I Admitted to the Supreme Court of NSW & the High Court of Australia
View profileLachlan Tax, a senior lawyer at Brander Smith McKnight, is a highly accomplished wills and estates and conveyancing lawyer, holding a Bachelor of Laws and a Bachelor of Commerce from the University of Wollongong. He also holds a Graduate Diploma of Legal Practice from the College of Law. He is admitted to the Supreme Court of NSW and the High Court of Australia. His attention to detail, thoroughness and sharp analytical skills enable him to provide a high quality conveyancing service, particularly when there are complex property issues involved.
