What is a related party transfer?

Related party property transfers refer to the process of transferring the whole or part of a property to a relative or business partner and can be a great way to minimize stamp duty or protect the property. Commonly, related party transfers may occur when:

· Transferring property between domestic partners;

· Gifting or selling a property to a child or sibling;

· Removing a person from title following a breakdown in relationship;

· Transferring property in accordance with a will; and

· Transferring property to or from a trust

Whether you’re gifting or selling a property to a relative or business partner, you will need a conveyancer to prepare and lodge the necessary transfer documents and stamp duty forms, even if the transaction is non-dutiable. Due to the stamp duty and capital gains tax liabilities that may arise from the transfer, you should seek the appropriate legal advice from an experienced conveyancer, and financial advice from an accountant.

For an amicable transfer of property, where neither party intends to exercise any rights should the other party default, it’s generally not necessary to prepare a formal contract of sale. However, in some cases the State Revenue Office or a bank may wish to see a formal agreement, or a party may want a formal agreement for tax records, in which case a simple contract may be entered into without the need or expense of preparing a section 32 statement.

Transfers of residential property between domestic partners for nil consideration or as a result of breakdown of relationship will be exempt from stamp duty provided that the property will be occupied as your principal place of residence following settlement

Transfers from a trust to a beneficiary under the trust, and transfers in accordance with a will or letters of administration are exempt from stamp duty.

In all other cases, if you are gifting a property to friend or family member, stamp duty will be calculated on the market value of the property, determined by a valuation or letter of appraised value by an estate agent. If the transferee is entitled to a duty exemption or concession, such as where the transferee is a first home buyer, they must produce evidence that they have paid the market value for the property in order to receive that duty exemption or concession.