How to transfer property between family members?
It is possible to transfer property titles between family members, but it should be done with caution.
Property owners transfer their properties for a variety of reasons, but the following are among the most common:
– tax planning
– helping a family member to get a foothold in the property market
– Assuring early inheritance
– asset protection
Gifting is a popular method of transfer, but it is also feasible to sell a property to a family member. If a property is jointly owned, the ownership split can be changed. Fees apply to such transfers or mortgage changes.
Different tax considerations apply depending on where the property is located, whether it is residential or commercial property, and how many properties the involved parties own.
Since each case is unique, those considering transferring a property should seek legal advice. Some people will end up paying more tax, such as capital gains, while others will pay less. It all depends on the unique circumstances of the individuals on both sides of the transaction.
Before transferring the property, you need to consider the following:
Tax liabilities and Benefits
Capital Gains Tax
Those transferring property should also be conscious of their state or territory’s anti-avoidance laws.
When someone is sued and transfers the family home into the name of the spouse, there are what are known as claw back provisions, or anti-avoidance measures, where people can say you’re disposing of your assets so you don’t have to pay out on a lawsuit and challenge it.
Therefore, careful legal planning must be engaged to ensure the law is correctly followed.