Selling A Property To A Family Member
Even when you’re selling property to family, there are still legal obligations to which you must adhere. For instance, you are still required to meet RCD and smoke alarm compliance, and legal obligations such as the ATO’s Foreign Resident Withholding and GST at Settlement.
It is important to understand that selling a house to a family member does not relieve you of these and other obligations. For this reason, you still need to ensure that property conveyancing specialists assist you in the process of transferring ownership, regardless of your relationship with the buyer.
What fees will you pay when transferring property to family?
Just as selling a house to family members requires you to comply with safety regulations and legal obligations, there are also fees that will likely still be incurred. This can be the case even if you are passing on a property as a gift.
In addition, you may be required to pay for the property to be valued by a certified valuer, as well as legal fees to cover the cost of the property transfer.
The new owner of the property will also likely incur costs. These include Transfer Duty, which will be a percentage of the value of the property (please note that this refers to the market value of the property, not the contract price). There are, however, some exceptions to this — as specialist settlement agents in Perth WA, KDD Conveyancing can assist you in determining if you are eligible for an exemption from Transfer Duty.
What is a related party?
In Western Australia, there are rules which apply with regard to Transfer Duty. Selling property to a family member is one type of related party transaction. The same rules apply in other instances of related party transactions, such as where the parties are:
- Related by blood, marriage, co-ownership or prior business relationship;
- Related companies as defined in the Corporations Act 2001;
- Partners in a partnership;
- Participants in the same joint venture;
- Trustees of trusts which have common beneficiaries;
- Joint owners of a property; or
- Not at arms’ length by any other circumstances.
What happens after deciding on a sale price when transferring a property to a family member/related party?
Once you have decided on a sale price, you should then seek the assistance of our Perth conveyancing services so that a Contract of Sale can be drawn up.
From this point on, the sale will be treated as a normal settlement to a non-related party.
It is up to the buyer and seller whether they wish to use the same conveyancer for this process, or engage separate settlement agents.
What is a Contract of Sale?
A Contract of Sale is a legally binding agreement between the seller and buyer of a property. It can include: any fixtures and fittings included in the sale; the settlement conditions; the sale price; the deposit amount and due date; and the final settlement date.
What happens after your sign the Contract of Sale when transferring a property to a family member/related party?
Once the contract is agreed and signed, it will be lodged by your conveyancer with the Office of State Revenue (OSR) for valuation and duty assessment. OSR doesn’t charge a fee for this, but depending on their workload, the process can take between 2-8 weeks. However, you can avoid the need to wait for an OSR valuation if you can provide a recent valuation report from a licensed valuer.
The OSR valuation will determine the Transfer Duty that will be payable by the buyer (unless you have been granted an exemption for any reason).
Need more information on selling a property to a family member/related party in WA?
As can be seen from the above, there are a number of factors to take into account when selling a house to a family member or related party. As specialist Perth settlement agents, KDD Conveyancing is here to advise and guide you through each stage of the process.
Please feel to contact us to find out more about selling property to family in Western Australia.