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If you want to help your kids get onto the property ladder, you might consider giving them one of your investment properties or selling one of your investment properties to them at a special price. Transferring property is a big deal, and it’s not something that should be messed around with. In fact, you need to play by the rules with this one because you don’t want this to go wrong and end up with unexpected fees.
The first thing that you should do if you’re planning on transferring a property is to speak to a conveyancer or a solicitor to help you through the process. You want to make sure that this is all done properly. In a simple transfer, you want to know that you have the paperwork, including the Quit Claim Deed, in place before you breathe a sigh of relief. As parents, you want to feel good about the fact that your kids know exactly what’s happening with their futures, and if you can get them on the property ladder, all the better. So let’s take a look at how you can transfer your property to your kids.
- Consider the tax implications. When you’re transferring a property to a family member, there may be implications in tax. You might be hit with additional taxes if your property was acquired before 1985. Usually this only applies if the property was an investment and not your principal place of residence. If your house was used previously as an income earner, then some of the gain may not be taxable. It’s vital that you are aware of any tax implications for passing on a house, especially if you are giving it to your children and you used to run a business from it.
- Assess the market value. It’s important that you obtain a valuation from a professional valuer before you hand over a house to your children, especially if you are planning on selling it to your kids rather than just giving it as a gift. Professional valuations can cost a couple of hundred dollars, but it’s important that you do this so that you know what the house is worth.before you sell it on.
- Will stamp duty be a factor? It’s important that you take a look at whether or not stamp duty is going to apply to the transfer of the property. In some cases, the transfer of a property to family members is exempt from stamp duty. This is in the case especially for transfers to children by parents who are separating. Even if you give the property away or you put it at a discounted price, stamp duty will still be calculated on the market value, which is why we mentioned the earlier step of checking what the market value is.
It’s a wonderful thing to transfer property to your kids, especially if it’s going to help them to get onto the property ladder. But you need to do it properly. You don’t want to find yourself hit with a tax bill for doing it wrong.
Meg is an author at Cinnamon Hollow. She writes on a variety of topics sharing tips and ideas for daily life.