Following from our first series, some foreign home owners do not want to sell their properties as they might want to gift it to their children. Below are some questions often asked.
If I don’t sell my property but gift it or transfer it to someone else, do I need to pay any taxes?
If there are capital gains, then generally speaking yes you need to pay capital gains tax.
Sometimes when you transfer the property to a related person, you may not receive any money from them. However, the tax office may still require you to prove the market value of the property at the time of transfer. In that case, you would need to obtain a valuation report from a registered valuer.
Whether or not there are capital gains would depend on your cost base and your current market value of the property.
Likewise, there may be certain ways to offset the gains if associated costs can be evidenced.
If I gift the property to my family member, do they need to pay any taxes?
Your family member being the transferee would need to pay stamp duty even though you have chosen to gift it to them. Revenue Office often regards this as a normal transaction requiring payment of stamp duty.
If I gift the property to my family member, what else do I need to pay attention to?
If your family member being the transferee is also a foreign person, then the transferee needs to obtain approval from the Foreign Investment Review Board. Given it would be a second hand property after transferring to your family member, they would need to reside in this property, otherwise they would need to sell the property in order to fulfil the conditions required by the Board.
If the transferee is a foreign person or a foreign trust, they also need to be mindful of stamp duty surcharge (depending on which State the property is in, the surcharge rate may be different, for example, currently, NSW and Victoria is 8% and Queensland is 7% of the purchase price).
If you have any questions in relation to selling and buying a property and you are a foreign person, please feel free to contact Longton Legal.
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*
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