While selling on the open market is an obvious one, there are several other reasons why you may be transferring home ownership. Here are five of these reasons, plus guidance on your legal and financial responsibilities.
Even when you’re not selling your home, there may be reasons for entering into the property conveyancing process to transfer your property title and ownership to someone else.
1. Separation or divorce
Separation or divorce is a common reason, as many couples find it makes sense for one partner to buy the other out of their property. This can be for different reasons, the most common being giving children the chance to stay in their family home.
2. Passing a property on to a family member
Transfer of a property to a family member most often happens when parents pass a property onto their child or children. After owning an investment property, parents may choose to gift it to their children rather than selling. Alternatively, children may want to stay in the family home once their parents have decided to downsize or move into an aged care facility.
3. Death of an owner in a joint ownership
Many properties are jointly owned, which means having more than one person on the title deed. Ownership is shared and each owner is equally entitled to rents and profits. When one person dies, the ownership of the property transfers wholly to the other partner.
4. Tax purposes
Real estate is an investment, and there are many things to consider, including tax benefits, future tax liabilities, capital gains tax, asset protection, estate planning, retirement and many more. As circumstances change, the reason for the investment may change too. For example, owners may choose to transfer their ownership to a company or a trust. Parents or grandparents may be holding the property as a trust for their children and ownership will eventually be transferred to the child.
5. Business protection
Many people who own their own business, or have a large stake in one, choose not to own their own property, or own a minimal share only. This means that if the company and its directors are facing financial trouble, their personal assets are protected. In this situation, the partner involved in the business may transfer the ownership, or most of it, to his or her spouse.
How to transfer home ownership
There are costs involved with transferring ownership of property, including fees for getting an independent market valuation, as the value will have an impact on any capital gains tax owing when the property is transferred. Changing property ownership will also incur stamp duty costs and this is based on the valuation of the land and property.
There are also likely to be other fees payable including mortgage fees and legal fees during the property conveyancing process.
You’ll need to ensure you are abiding by all legal requirements, including tax-avoidance rules. These state that you must be transferring the title for a valid reason, not just for tax benefits.
Have you transferred ownership of your property? Share your tips in the comments below.
