It is a common misconception that gifting property to a family member, results in the “buyer” (or receiver in this case) being exempt from paying stamp duty – this is false. Even if you are transferring your property to a family member, stamp duty is still payable and is calculated on the valued property price.
Scenario:
John Doe wishes to gift one of his properties to his son, James Doe at a discounted rate of $250,000. A certified valuer determines that the property is worth $500,000.00. As James is not exempt from paying stamp duty on the transfer, he will be required to pay a sum based off the valuation price of $500,000 instead of the agreed price of $250,000.
In the scenario above, there are a few fees that the parties can expect from the transfer. John Doe will need to pay valuation costs and legal fees for the property transfer (either a Conveyancer or Solicitor) so that a contract is drawn up and the relevant transfer documents are prepared properly. John may also be liable for Capital Gains Tax if the property was not his principal place of residence (but let’s save that for another day).
On the other hand, James Doe will be liable for the payment of stamp duty as well as his own legal fees, as each party should have their own legal representation.
Do not let the notion of gifting a property lead you to believe that there are no fees for stamp duty. It is always important to obtain legal advice before purchasing or selling a property to ensure you understand your rights & responsibilities and remain compliant. Contact us today if you have any questions or would like our assistance with your conveyance.