Sometimes a full buying and selling process doesn’t seem to fit with your plans for a property. What if you just want to add someone’s name to a land title as another owner or transfer ownership to a family member?
We refer to these transactions as Related Party Transfers. You might also hear them referred to as family transfers or a transfer of equity.
These terms describe a conveyance where ownership of a property is changed in an arrangement between related parties and there's no traditional arm’s length sale and purchase occurring.
Related Party Transfers will usually result from:
- property owned by a person being transferred to become jointly owned by them and their spouse or partner;
- family members adjusting ownership of property within a family, such as parents transferring property to children;
- agreements or court orders made when spouses or partners separate;
- arrangements intended to protect assets or manage tax.
As you might expect, there are many issues to consider in relation to such transfers of property ownership. Some examples of things to consider include:
- The transfer of property in most cases will trigger the imposition of Transfer Duty. While there are some exemptions that may exist it is a significant factor to consider in relation to such transactions. When property is being gifted or otherwise exchanged for less than the current market value, transfer duty will usually be assessed on the basis of a valuation of the property.
- Taxation related matters must be considered carefully and professional tax advice sought;
- Where banks are involved, their will have their own requirements that will need to be met which could include that a contract is entered into or that specific ownership shares are adhered to. Banks must usually remain satisfied that the new owner(s) will have the capacity to pay if mortgages are being amended.