Gifting Property to Your Children in NSW: Stamp Duty, Tax and Legal Considerations

Helping an adult child with property can be an extraordinary gift. It may also be one of the largest financial decisions a family makes. Transferring ownership of a house or investment property involves more than agreeing on a price and changing the name on a title. The transfer can affect tax, lending, retirement plans and what happens to the rest of your estate.

Can parents gift property to their children in NSW?

Yes. You can transfer a property to your child without payment, or agree to sell it for less than market value. It is still a formal property transaction. The ownership change needs to be documented and registered, and any mortgage, duty and tax issues need to be resolved.

An important starting point is to distinguish gifting a property from giving your child money towards a property purchase. They can have different legal and tax consequences. This guide focuses on transferring ownership of land or a home you already own.

Do you pay stamp duty when gifting a house?

Usually, yes. In NSW, transfer duty is generally assessed on the greater of the purchase price or the property's unencumbered market value. Giving a property away, or transferring it for a nominal sum, does not ordinarily make the duty disappear.

For example, if you transfer a property worth $800,000 to your daughter for $100,000, duty is generally assessed using the $800,000 market value. Revenue NSW may require appropriate evidence of that value because the transaction involves related parties. Certain exemptions or concessions may apply, but you should never assume a family transfer qualifies.

Will capital gains tax apply?

The person giving the property may have a capital gains tax (CGT) event. For non-arm's-length transfers, the Australian Taxation Office can apply market-value rules even when no money changes hands. An investment property may therefore create a tax liability without generating cash from the transfer to pay it. A home that qualifies for the main residence exemption may be treated differently.

Whether CGT arises depends on when the property was acquired, how it has been used and the owner's circumstances. Ask an accountant or tax adviser to assess the likely outcome before signing documents.

What if there is a mortgage?

A mortgage does not disappear when the owners change. The lender may need to consent to the transaction and the borrowing may need to be discharged or refinanced. A parent who plans to give a property away should understand whether they will continue to owe money, lose access to security or affect their ability to borrow in future.

What if you want to keep living in the home?

This needs particular care. Transferring title while expecting to remain in the house can create uncertainty about occupation, expenses, repairs and what happens if the child separates, dies or experiences financial difficulties. Any intended right to occupy should be considered and appropriately documented rather than left to an informal family understanding.

How does the gift affect your estate plan?

Imagine you have two children and intend to treat them equally. You give one a property during your lifetime, expecting the other to receive a comparable amount under your will. The value of both assets may change. Your financial circumstances may also change. The intended balance could be very different years later.

Review your will and other estate planning documents alongside the transfer. It may also be sensible to record the nature of the gift and communicate your intentions, especially in blended families or where there have already been differences over money.

Is it better to gift now or leave the property in your will?

Neither option is automatically better. A lifetime transfer can provide immediate help, but it also means giving up ownership now and may trigger costs now. Keeping the property may preserve your control and financial security, but the asset will then need to be dealt with under your estate arrangements. Tax, duty and succession implications should be examined together.

Considering a transfer within your family?

Before making arrangements, clarify the property's value, the lender's requirements, the duty and tax position, and what you want to achieve for the rest of your family. Dawson Pouwhare Legal & Conveyancing can help you understand the legal process and documents involved.

Legal disclaimer: This article contains general information about Australian and NSW law and is not legal advice. It may not reflect changes in the law or your individual circumstances. You should obtain advice about your situation before acting on this information.